Delphi Daily

The unfolding MetaMask story reveals valuable insights on the emergent and ever-evolving Ethereum defi stack. In particular, aggregators, as well as underlying liquidity protocols.

With the rise of DEX aggregators, smart-order routing made it more efficient to trade on aggregator venues rather than going straight to the liquidity source (for the most part). The growth in both 1inch and Matcha (0x project) volume exemplifies this trend. DEX aggregators source liquidity, while AMMs/MMs must surface liquidity, and therefore, aggregators compete for flow, while AMMs compete for LP capital. Two different ball-games, but both still highly competitive incentive games. It is also interesting to think about who is the stickier customer between traders and LPs.

Unfortunately for DEX aggregators, they compete with wallets (MetaMask, Argent, etc.), portfolio management platforms (Zapper, Zerion), and hybrids (DeBank) who may be the ones that ‘control the end-user’ through their core and ancillary services. The AMM comparable here is strategy protocols (Alpha, Yearn, etc.), which have the strongest incentives to retain and direct liquidity to various venues, and in such, ‘owning’ LP capital.

MetaMask – the aggregator’s aggregator

While still early innings for Metmask’s swapper, which incurs a 0.875% fee on each trade, it has seen impressive growth over the past few months. MetaMask has amassed ~ 10M in fees, with 6.7M coming from January 20

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