On the Eve of the Cancun Upgrade, Could Metis Be the Biggest Dark Horse in This Cycle?
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On the Eve of the Cancun Upgrade, Could Metis Be the Biggest Dark Horse in This Cycle?
The Metis ecosystem incentives have just launched, indicating an alpha opportunity worth keeping an eye on.
Navigating Web3 tides with focused insightsAuthor: Lucky, Core Contributor of Biteye
Editor: Crush, Core Contributor of Biteye
Community: @BiteyeCN
*Approximately 4,500 words, estimated reading time: 8 minutes
Metis, which surged fivefold in just three months, has undoubtedly captured widespread attention ahead of the upcoming Cancun upgrade. But behind this surge, what is driving Metis's development?
This article provides a comprehensive analysis of Metis, covering its technology, ecosystem growth flywheel, decentralized sequencer advancements, and more—aiming to give readers a clearer understanding of the Metis ecosystem.
01 Introduction to Hybrid Rollups
MetisDAO is an Ethereum Virtual Machine (EVM)-compatible Layer 2 scaling solution. Like other Layer 2 solutions, it reduces congestion on the Ethereum blockchain by bundling L2 transactions and submitting them to the L1 network.
However, unlike other L2s, Metis employs an innovative Hybrid Rollup technology that combines two mainstream blockchain scaling approaches: Optimistic Rollup (OP Rollup) and Zero-Knowledge Proofs Rollup (ZKPs Rollup).
OP Rollup handles potentially dishonest transactions through its fraud proof mechanism, while ZKPs provide a more secure validation method, ensuring only valid transactions are confirmed. As a result, Metis' Hybrid Rollup effectively reduces the risks of fraud and erroneous transactions.
Metis’ Hybrid Rollup enables efficient and secure processing of large transaction volumes without compromising scalability. Any EVM-compatible DApp can seamlessly integrate with Metis. This not only offers users a high-performance, secure trading environment but also provides developers with a convenient platform for integration.
In implementing Hybrid Rollup, Metis incubated the zkMIPS project to support its deployment—ZKM. ZKM implements zero-knowledge proof (ZKP) security at the CPU level for all virtual machines (VMs) and applications, supporting multiple blockchain smart contract engines and enabling developers to easily apply ZKP in development.
ZKM can verify all blockchain and non-blockchain transactions, reduce gas fees, and shorten withdrawal wait times. The introduction of ZKM represents one of Metis’ key technological advantages over other L2s.
Beyond its Hybrid Rollup technology, the most exciting aspect of Metis’ current development trajectory is its upcoming decentralized sequencer.
02 Decentralized Sequencer
A sequencer is the component in an L2 responsible for ordering, organizing, and batching transactions before submitting them to the L1 network. Currently, most L2 projects—including Optimism and Arbitrum—rely on a single centralized sequencer for these tasks, creating three potential risks:
1) Single point of failure: If the sequencer fails due to attack or technical issues, the entire network may halt;
2) Scalability limitations: A single sequencer may struggle to handle growing transaction volumes;
3) Low censorship resistance.
Beyond these issues, centralized sequencers limit community and user participation, reducing them to passive network participants who cannot share in sequencer revenue.
To address these challenges, MetisDAO plans to launch a Decentralized Sequencer Pool (Sequencer Pool), mitigating risks associated with centralized sequencers, enhancing network scalability, and building a sustainable, community-centric Layer 2 ecosystem.
Advantages of Metis’ Decentralized Sequencer:
1) In the decentralized sequencer pool, multiple sequencers work collaboratively. Any sequencer that has staked can access the mempool and process transactions, preventing malicious manipulation by any single entity. This improves transaction throughput and enhances fault tolerance—ensuring the network remains operational even if one sequencer fails;
2) Users can become new sequencer nodes by staking the native METIS token, while network participants can monitor sequencer activity, increasing overall system transparency and trustworthiness;
3) From a long-term sustainability perspective, node staking helps reduce circulating supply of METIS, potentially creating positive pressure on the token’s value;
4) The introduction of the sequencer pool will also bring liquid staking and restaking to the Metis ecosystem. Since last year, liquid staking has become one of the most important components in DeFi, capturing the largest share of total value locked (TVL). Integrating liquid staking into Metis opens up new possibilities and use cases for $METIS.
As shown in the diagram above, Metis’ sequencer transaction flow:
1. Initiation: User initiates a transaction;
2. Sequencer Node: Transaction is forwarded to a sequencer node in the network;
3. Block Generation: The sequencer receives the transaction and creates a block upon validation;
4. Finalization: Multi-Party Computation (MPC) nodes aggregate these blocks and submit them to the Ethereum mainnet.
To encourage community involvement, Metis offers staking rewards for sequencer nodes—meaning these nodes earn additional METIS tokens beyond gas fees (the primary current source of income).
This design incentivizes broader participation in node staking, ensuring power isn't overly concentrated and reinforcing decentralization principles.
Before the official launch of the decentralized sequencer, Metis will conduct three rounds of community testing. So far, two rounds have been completed. The first round began on January 3rd and lasted 27 days, with nearly 200,000 users participating and generating 4 million on-chain transactions.
The second round saw over 300,000 participants and more than 11 million on-chain transactions executed. Those who missed the first two rounds should watch for announcements regarding the third test phase and participate promptly.
03 Ecosystem Incentive Flywheel
On December 18th last year, Metis officially launched the MetisEDF (Metis Ecosystem Development Fund) initiative, allocating 4.6 million METIS tokens to further drive innovation and growth within the Metis ecosystem.
At the current METIS price of $106, this fund totals nearly $500 million—making it the largest ecosystem incentive fund among all L1s and L2s in the past two years.
Fund allocation breakdown:
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Sequencer Mining: 65.4% (3 million $METIS)—allocated to reward sequencer node operators and promote community participation;
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Ecosystem Grants: 34.6% (1.6 million $METIS)—used to support project development, protocol deployment, liquidity provisioning, user incentives, and other initiatives fostering ecosystem growth.
On February 8, Metis announced the Liquid Stake Blitz program, leveraging the full 4.6 million METIS from the MetisEDF fund to accelerate the growth of LSD (Liquid Staking Derivatives) protocols and LSD-focused products on the Metis network.
Under the Liquid Stake Blitz initiative, starting February 8 until the end of February, LSD protocols in the Metis ecosystem could submit proposals via the Metis community governance system, with formal voting scheduled for March.
After voting concludes, a limited number of winning protocols will gain the right to be paired with decentralized sequencer nodes (i.e., whitelist status), securing stable node participation and receiving 20% of the first-year MRR (Mining Reward Rate) as mining incentives.
It's important to note that the development of LSD protocols within the Metis ecosystem significantly lowers the barrier to entry for staking on the network.
Unlike Ethereum-based LSDs that lower the threshold for PoS validator staking, Metis-based protocols like ENKI reduce the barrier for staking as a sequencer node.
This creates new earning opportunities for ordinary users:
1) Guaranteed minimum mining rewards of at least 20% funded by the ecosystem grant;
2) Potential airdrop rewards from future LSD tokens;
3) Increased demand for METIS, helping the Metis ecosystem achieve a positive feedback loop of growth.
Take Enki as an example: the protocol launched its "Fantasy" genesis airdrop campaign in early February, distributing 1 million ENKI tokens (10% of total supply) to community members as rewards.
Additionally, Enki announced that the team will retain no tokens, and the remaining 90% of ENKI supply will be gradually released over time through various mechanisms. This means users can continue earning ENKI by restaking eMETIS into seMETIS or engaging in LP pairings such as METIS/eMETIS and other interactive protocol activities.
Those interested in participating can use our Biteye exclusive referral link.
For large capital entities, they can stake between 20k–100k METIS tokens to operate a sequencer node.
For individual users, they can stake METIS on various LSD platforms to earn node rewards, while their staking receipts remain liquid and usable across the ecosystem.
Being a pioneer in decentralized sequencers, introducing a revenue-sharing model, and advancing LSD adoption—all these factors fundamentally differentiate $METIS from other L2 tokens.
For most other L2 native tokens, utility is limited to governance rights without offering holders any share of network revenue.
Therefore, as Metis becomes revenue-generating, more users are incentivized to join as nodes, leading to increased token staking, tighter supply dynamics, and upward price pressure.
Higher prices attract more participants, fueling ecosystem growth. A thriving ecosystem strengthens sequencer incentives, encouraging even more staking. This cycle gradually forms a self-reinforcing positive flywheel.
04 Current Ecosystem Status and Key Projects
Metis currently has a TVL of $82.82M. Observing the trend since 2023, we can see a significant increase in TVL following Metis’ announcement of its decentralized sequencer design in 2024—indicating strong market and community confidence in this direction.
Key projects currently in the Metis ecosystem include:
1. ENKI: The first LSD project on Metis, designed to simplify and democratize participation in the Metis sequencer node ecosystem. It allows regular investors to earn rewards by staking into Metis sequencer nodes. Currently in testnet, not yet live;
2. Hera Finance: An AI-powered DEX aggregator that helps users find optimal trade prices.
4. Ethena: A recently popular stablecoin protocol on Ethereum, aiming to provide a censorship-resistant, scalable, crypto-native solution via USDe. Announced collaboration with the Metis ecosystem on February 28.
5. Aave: The protocol with the highest TVL on Metis and one of the largest lending protocols across chains.
6. Hermes Protocol: A DEX enabling slip-free trading.
7. Net Swap: The first DEX on the Metis ecosystem, enabling fast, low-cost token swaps on the Metis network.
8. Tethys Finance: The first perpetual futures protocol in the Metis ecosystem, allowing users to trade major tokens and METIS with up to 50x leverage.
9. Stargate: An asset bridge developed by LayerZero Labs, enabling cross-chain asset transfers for users and dApps across multiple chains.
10. Artemis Finance: A liquid staking protocol specifically designed for the Metis decentralized sequencer pool and one of the two officially partnered LSDs. Users can stake $METIS to receive a liquid token $artMETIS, which automatically accrues rewards and can be used across Metis dApps.
11. WAGMI: A comprehensive DeFi solution whose liquidity pools automatically rebalance and dynamically allocate funds to maximize returns during trades. It received a $2M grant from the Metis ecosystem fund and has announced a partnership with DWF.
The Metis ecosystem incentives have only just begun, meaning there are alpha opportunities worth monitoring closely.
05 Conclusion
As the first Ethereum rollup to adopt a decentralized sequencer, Metis offers users and DApp developers an efficient, secure transaction environment and seamless integration platform through its unique Hybrid Rollup technology and upcoming decentralized sequencer.
With continued ecosystem expansion, progress across key projects, and the imminent launch of the decentralized sequencer—amplified by positive incentives from its ecosystem fund—we have every reason to believe that Metis will carve out a significant position among L2 competitors, delivering greater value and opportunities for users and developers alike.
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