The popularity of decentralized finance played an integral role in the launch of MetaMask Institutional as c
The popularity of decentralized finance played an integral role in the launch of MetaMask Institutional as companies looked to safely enter the space.
MetaMask is arguably one of the most well-known self-custodial Ethereum software wallets in the cryptocurrency ecosystem, with its signature Orange Fox avatar plug-in acting as a portal to the world of Ether (ETH)-based tokens, decentralized applications (DApps) and decentralized finance (DeFi).
The retail browser plug-in wallet surpassed 30 million users worldwide in 2022 and has slowly turned its attention to serving a growing number of institutional users that have looked to gain exposure and manage assets in the growing DeFi space.
Cointelegraph caught up with Elizabeth Mathew, head of growth and partnerships at MetaMask Institutional (MMI), at the firm’s stand during Token2049 in Singapore. The backdrop of a Blue Fox was a noticeable change, with the color scheme in contrast to the familiar orange of the MetaMask logo that most users are accustomed to.
MetaMask Institutional (MMI) has been in existence since October 2021 at a time when institutions began allocating significant amounts of capital to DeFi marketplaces through the conventional MetaMask retail wallet.
The service was born out of the need to serve specific requests from institutional users. Custodial access was a primary consideration in order to give a wider range of operational controls over a wallet. This included suitable segmentations of roles and responsibilities for a wallet belonging to an entity.
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The second consideration was compliant access to DeFi, which, by nature, is controlled by smart contracts and liquidity pools and no real human-controlled element or custodian, as Mathew explained:
“A very unique challenge is that you don’t know who your counterparty is in DeFi, but we have inbuilt tools within MMI that gives you the ability to screen a DeFi pool pre and post trade.”
The need for a specific institutional offering was in part necessitated by engagements with institutional users that had been using the retail platform to manage millions of dollars of digital assets:
“It was shocking, the kind of risk management we saw from institutions. They had millions of dollars of assets kept within their browser plugins, or retail MetaMask browser with a hardware wallet and a spreadsheet. That was really how the earliest crypto funds were getting involved in the space.”
Mathew stressed that this was not fit for purpose for organizations involved in trading and DeFi as well as organizations that were exploring Web3 through various non-trading related activities. This broadened the scope of MetaMask’s consideration of how to plug any organization into Web3 and not solely traders or fund management firms.
Intentional design
The development of MetaMask Institutional was more than a year in the making, with Mathew describing the team as being intentional in its design to not become an asset custodian.
The result was MMI aggregating across a handful of reputable custodial stacks given that different parts of an institution’s portfolio would require different techniques and custodial technologies:
“Different organizations have very different needs, in terms of how they interact with Web3. Some may be high frequency trading-style operations that require low latency and programmatic access. And then another organization might be interested in engaging with their fan base using an app suite which is very different.”
Mathew highlighted MMI’s efforts to not be vertically integrated at the custodian layer but instead aggregated horizontally through service providers that specialize in the governance layer and custodial settlement layers. MetaMask Institutional now has 11 custodial partners, with five based in Asia, a region where MetaMask is seeing increased involvement.
Altogether, the 11 custodial partners already serve more than 1,800 organizations from a variety of industries, a point which Mathew believes will play a pivotal role in onboarding companies and service providers into Web3:
“When they want access to Web3, they’ll essentially turn to their facility and say, ‘turn on my Web3 access.’ Everyone’s not ready for it yet, but we’re certainly having conversations with institutions that are thinking about this more long term than some of the short term speculative opportunities.”
Who is using MetaMask Institutional
Having been around for just over a year, Mathew revealed that 250 organizations had signed up and were active on MetaMask Institutional, while the 1,800 organizations that make use of MMI custodial service providers could potentially be onboarded.
Access to DeFi markets remains a primary driver of…
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