MetaMask is a popular decentralized crypto wallet and trading platform based on the Ethereum network. It makes money from swap fees on token exchanges. The platform also functions as a gateway into the world of dApps and Web3.
MetaMask primarily makes money on swap fees whenever a user exchanges one type of token for another. The company also makes money from MetaMask Institutional subscriptions and merchandise.
Founded in 2016 by former Apple employee Aaron Davis and Dan Finley, MetaMask was created to capitalize on the power of the Ethereum network. It delivered a communal crypto-based platform where users could interact with each other and share ideas.
MetaMask marked a shift from custodial to non-custodial, decentralized wallets. Each user was the manager of their very own private bank. This concept helped the company catapult from 545,000 users in 2020 to over 10 million users in 2021, an 1,800% increase.[1]
MetaMask is owned by the crypto company ConsenSys, a blockchain software company that was founded by Joseph Lubin in 2014.
What is MetaMask & How Does It Work?
MetaMask is a non-custodial Ethereum wallet that allows users to trade tokens on various Ethereum networks. It is available as a browser extension for desktop users. Mobile users can download the app for their Android or iOS devices.
With MetaMask, users can access a range of decentralized applications (dApps). The platform is primarily focused on sending and receiving Ether (ETH) via third-party market makers and wallets. But users can also trade other tokens through decentralized exchanges.
Tokens such as AAVE, COMP, WBTC, and more can be bought using Ethereum. MetaMask recently added support for NFTs, but this feature is limited to its mobile app. Users can also add new networks to make transactions.
By default, MetaMask uses the main Ethereum network. It can also link to new networks like Binance Smart Chain, Arbitrum, Matic Mainnet, and Avalanche. Users need the name, remote procedure call (RPC) URL, and chain ID to add networks.
MetaMask supports both hot wallets and cold wallets. A hot wallet is one that is connected to the internet whereas a cold wallet is not connected to the internet and provides more protection against potential attacks or stolen funds. Users can connect their hardware wallets to MetaMask and transfer funds. Currently, the browser extension version of MetaMask supports Trezor, Ledger, Lattice, Keystone, and AirGap Vault.
In order to use MetaMask, users need to create an account. The MetaMask browser extension is currently available for Chrome, Firefox, Brave, and Edge. Each user is provided with a 12-word security phrase that acts as their private key.
And then, users create a password. This acts as an additional security layer to prevent bad actors from accessing the MetaMask app or extension. Any time a user chooses to leave their computer, they can click a button to temporarily lock the MetaMask app.
Reopening the app will require a password. Once users have set up an account, they can tweak various settings within the app. Primary currency can be set to Ethereum or fiat, depending on a user’s preference.
MetaMask also supports a wide variety of languages which makes it a truly global blockchain platform. If a user wishes to wipe their transaction history, they can do so with an account reset. MetaMask also has advanced gas price controls that allow users to choose between various transaction speeds. On the Ethereum blockchain ‘gas prices’ refers to the pricing or fee to conduct a transaction or execute a contract on the platform.
Faster speeds also mean higher gas prices. Users can enter their own values for how much they are willing to pay in gas prices. Experienced users can choose to speed up a transaction or cancel it.
Speed-up and cancellation options are available while a transaction is pending. Speeding up a transaction might incur higher gas fees. MetaMask also allows users to set custom slippage tolerances on token swaps.
One of MetaMask’s best features is its automatic token verification system. This prevents scamming because some tokens might use the same name and ticker symbol as each other. MetaMask also compares prices between various aggregators and market makers to provide users with the best offers at any given time.
ParaSwap, Uniswap, Curve, 1inch, and AirSwap are some of the decentralized exchanges supported by MetaMask. Tokens only need to be approved once, and MetaMask will calculate the best routes to reduce network fees on transactions. By using MetaMask, users can swap a much wider range of tokens than what is supported by any single exchange.
To generate better liquidity, MetaMask can automatically split the swap between different providers. All this happens behind the scenes and is completely automated. The user gets maximum value for their investment without having to worry about any of the fine details.
Adding new tokens to MetaMask is a very easy process. Users just need to visit a crypto information site like CoinGecko. From here, they can open the page of a token like Matic or Gate and click on the ‘add to MetaMask’ icon.
MetaMask is partnered with fiat to crypto on-ramp platforms that help users buy ETH with their country’s currency. Wyre and Transak are the two options currently available on MetaMask for buying crypto with fiat money. Users can use their debit card or do a wire transfer from their bank.
The platform recently surpassed 30 million monthly active users (MAUs). It recorded a 42% increase in activity over a period of just four months.[2] The reason so many people love MetaMask is its multirole functionality.
It isn’t just a crypto wallet, but an accessibility layer that links directly to dApps across all networks that use the Ethereum protocol. Users can easily swap between tokens and diversify their Ethereum portfolio with one simple app. MetaMask’s automated exchange comparator also helps users get better offers while also saving time on each transaction.
Business Model of MetaMask
MetaMask follows a transaction-based business model in which it charges users a service fee of up to 0.875% for token swaps. The company also has a freemium model that’s implemented through MetaMask Institutional. It is a gateway for businesses and collectives to start investing in the decentralized finance and Web3 ecosystem.
By offering value to users through a decentralized wallet system, MetaMask acquires a loyal customer base. These people prefer MetaMask over other crypto wallets because of their wallets’ versatile natures. Not only is MetaMask a trading and exchange platform, but it also allows users to manage and control dApps across a multitude of Ethereum networks.
MetaMask differentiates itself from the competition by offering a unique exchange comparator algorithm that automatically provides traders with the best swap offers. It also calculates the best paths to minimize gas prices or network fees. MetaMask users have the ability to add new tokens, invest in NFTs, and manage their entire Ethereum portfolio with a single app.
The extensive functionality offered by MetaMask helps it organically gain new users through web searches. It is one of the most popular decentralized finance (DeFi) apps. By offering a gateway into the world of Web3, MetaMask introduces new possibilities for users to interact with each other and add value to the ecosystem.
Through MetaMask institutional, the company attracts businesses that process much higher trade volumes compared to individual users. MetaMask Institutional is a paid service, which guarantees a stable and reliable revenue source. Businesses who opt into MetaMask Institutional receive bonus features that boost security and operational efficiency.
Since MetaMask is an aggregator of data and not a liquidity provider, it doesn’t have to split revenues with token holders. This significantly boosts its profit margins compared to exchanges like UniSwap or SushiSwap. MetaMask users are willing to pay a 0.875% fee for the convenience of making a swap or trade on any exchange within seconds.
While there are several browser-based crypto wallets, none offer the combination of features that MetaMask has. For that reason, MetaMask occupies a niche of its own, with very little competition. By acting as a gateway to existing wallets and exchanges, MetaMask attracts users of those services.
Most MetaMask users just want a one-stop solution for their daily crypto trading needs. And a way to interact with Web3 apps on Layer 2 networks. By aggregating services in this manner, MetaMask acquires new users without spending that much money on advertising.
A 2021 study claimed that MetaMask was generating anywhere from $85,000 to $220,000 each day from service fees alone. At the time, MetaMask was generating less volume compared to SushiSwap and Curve. But it was making significantly more money, with an estimated revenue of $100 million in 2021.[3]
MetaMask’s biggest rival is Trust Wallet, as they offer similar services. Just like MetaMask, Trust Wallet is a gateway to Web3 and dApps. It even has a browser for decentralized applications where users can browse NFTs and make money on blockchain games.
Trust Wallet supports over 65 different blockchains and allows users to trade Bitcoin or Litecoin in addition to Ethereum. However, MetaMask is the superior choice for users who wish to access a wide range of decentralized exchanges to swap tokens. MetaMask is also available through a browser extension, while Trust Wallet is only available on mobile.
For anyone looking to carry a wide variety of altcoins in their pocket, Trust Wallet is the better choice. However, MetaMask is far better for users who want a one-stop solution for all their Ethereum trading needs. It is also easier to add new tokens on MetaMask compared to any other crypto wallet.
There is no data on MetaMask’s financials, as it is a private company. It is hard to speculate on MetaMask’s operating costs.
MetaMask is estimated to have an annual revenue of around $10.1 million per year, but it also likely has considerable expenses.[4] These include things like staffing costs, hosting costs, platform costs, and development costs.
Due to the lack of data on MetaMask’s financials, it is unclear how profitable the company’s business model is.
How Does MetaMask Make Money?
MetaMask makes money from three different revenue streams. These include swap fees, MetaMask Institutional, and merchandise.
As MetaMask is currently a subsidiary of ConsenSys, which is a private company that doesn’t release details about how much revenue they generate.
Swap Fees
This is the biggest driver of revenue for MetaMask. A 2021 study found that 2% of active users swap tokens on MetaMask. Back then, the company had five million active users and was estimated to be generating nearly $100 million in revenue.[5]
MetaMask makes its money by charging a 0.875% service fee for connecting users with a decentralized exchange like Uniswap. The company provides a safe and easy way for crypto investors to manage their portfolios. In return, it takes a small fee to fund product development and generate profits.
MetaMask Institutional
This service offers custody integration and multi-user wallet access to organizations in exchange for a monthly subscription fee. The exact rates aren’t public and can vary based on a tiered freemium model.
MetaMask charges a price for compliance reports, lowering the cost per unit as a company generates more reports. Institutions get access to specialized analytics, an investor dashboard, and added security features.
Merchandise Sales
In partnership with Spreadshop, MetaMask sells official merchandise. Users can buy clothing and accessories by clicking on the merchandise link on MetaMask’s official site. They will then be redirected to Spreadshop, where they can browse through a collection of items.
The company sells t-shirts, bags, cups, backpacks, and other goodies. It is unclear how much MetaMask makes from merchandise sales. But it is likely a small portion of their overall revenue.
MetaMask Funding, Valuation & Revenue
MetaMask is currently owned by crypto company ConsenSys. ConsenSys is a private company and doesn’t release any details regarding its financials. Right now, it is unclear what MetaMask is valued at.
ConsenSys raised $725 million in funding over five rounds between 2019 and 2022. Notable investors include Marshall Wace, NJF Capital, ParaFi Capital, and Softbank Vision Fund. The company’s latest funding round was a Series D round in February 2022, which raised $450 million.[6]
ConsensSys’ last disclosed valuation was $7 billion when it raised money through a series D funding round in 2022. The company doubled its valuation compared to a November 2021 funding round in which it raised $200 million.[7] It is estimated that a significant portion of ConsenSys’ revenue comes from MetaMask’s trading fees.
Annual revenue for MetaMask is estimated to be around $10.1 million.[8] But there is no official report to verify this. A study from 2021 speculated that the company had made $100 million in revenue that year.[9]
That was back when MetaMask had five million monthly active users. Currently, it has over 30 million users.[10] It is not unlikely that MetaMask has an annual revenue well in excess of $100 million at this point.
Is MetaMask Profitable?
MetaMask is likely profitable. Its parent company’s estimated valuation doubled between 2021 and 2022.[11] MetaMask’s trading fees are a major driver of revenue for ConsenSys.
While MetaMask is focused on expanding its business by offering more Web3 and DeFi services, the platform doesn’t spend much on marketing or sales. MetaMask is a data aggregator and gateway to exchanges, rather than a liquidity provider. As a result, it doesn’t incur significant operational costs.
In addition, MetaMask has increased its monthly active user count by nearly 600%. It went from five million in 2021 to 30 million in 2022.[12] Hence it is quite likely that the company is profitable and will keep growing its revenue in the coming years.
Conclusion
MetaMask is making money by providing an easy-to-use and secure way to access Ethereum DApps, which are not known for being user-friendly, and they’re doing it in a way that benefits everyone: the users, the developers, and their own business.
While still new, MetaMask is making exciting strides towards bridging the gap between web browsers and the Ethereum blockchain.
With their free product, they have captured a strong portion of the potential user base, and it will be interesting to see how their business model evolves as they gain more customers. Perhaps eventually, they will offer premium upgrades or paid add-ons to the core product.
Either way, there is little doubt that MetaMask will continue to grow as well as integrate with other popular hardware wallets like Trezor and Ledger.
If you’re interested in learning more about MetaMask, check out their website: https://metamask.io/
They also have a subreddit where you can ask questions, get answers from other users, or just hang out: https://www.reddit.com/r/MetaMask/
Thanks for reading!
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