MetaMask Revenues, DEX Fee Competition, and Aggregator Wars

NOV 18, 2021 • 3 Min Read

Ashwath Balakrishnan

DISCLOSURE: DELPHI VENTURES IS INVESTED IN BTC AND ETH. MEMBERS OF OUR TEAM ALSO HOLD PSP, UNI, AND CRV. THESE STATEMENTS ARE INTENDED TO DISCLOSE ANY CONFLICT OF INTEREST AND SHOULD NOT BE MISCONSTRUED AS A RECOMMENDATION TO PURCHASE ANY TOKEN. THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU SHOULD NOT MAKE DECISIONS BASED SOLELY ON IT. THIS IS NOT INVESTMENT ADVICE.

Metus vulputate eu scelerisque felis. Nulla facilisi cras fermentum odio eu. Scelerisque fermentum dui

faucibus in ornare quam viverra orci sagittis. A iaculis at erat pellentesque adipiscing commodo elit. In

fermentum et sollicitudin ac orci. Ultrices sagittis orci a scelerisque purus. Faucibus ornare

suspendisse sed nisi lacus sed viverra tellus in. Mauris cursus mattis molestie a iaculis at erat

pellentesque adipiscing. Volutpat diam ut venenatis tellus in metus vulputate. Eu consequat ac felis

donec et odio pellentesque. Eu mi bibendum neque egestas congue quisque egestas diam. Quam

lacus suspendisse faucibus interdum posuere lorem. Quam id leo in vitae. Ut faucibus pulvinar

elementum integer enim neque. Id ornare arcu odio ut sem nulla pharetra diam sit. Molestie ac feugiat

sed lectus vestibulum mattis. Ipsum nunc aliquet bibendum enim facilisis. Euismod nisi porta lorem

mollis aliquam ut porttitor.

Iaculis nunc sed augue lacus viverra vitae congue eu consequat. Gravida neque convallis a cras.

Nunc scelerisque viverra mauris in aliquam sem. Non odio euismod lacinia at quis risus sed vulputate

odio. Purus faucibus ornare suspendisse sed. Turpis egestas maecenas pharetra convallis posuere

morbi. Nec feugiat nisl pretium fusce id velit ut. Nunc congue nisi vitae suscipit tellus mauris a diam.

Posuere sollicitudin aliquam ultrices sagittis orci. Urna nec tincidunt praesent semper. Turpis nunc

eget lorem dolor sed viverra.

suspendisse sed nisi lacus sed viverra tellus in. Mauris cursus mattis molestie a iaculis at erat

pellentesque adipiscing. Volutpat diam ut venenatis tellus in metus vulputate. Eu consequat ac felis

donec et odio pellentesque. Eu mi bibendum neque egestas congue quisque egestas diam. Quam

lacus suspendisse faucibus interdum posuere lorem. Quam id leo in vitae. Ut faucibus pulvinar

elementum integer enim neque. Id ornare arcu odio ut sem nulla pharetra diam sit. Molestie ac feugiat

sed lectus vestibulum mattis. Ipsum nunc aliquet bibendum enim facilisis. Euismod nisi porta lorem

mollis aliquam ut porttitor.

Iaculis nunc sed augue lacus viverra vitae congue eu consequat. Gravida neque convallis a cras.

Nunc scelerisque viverra mauris in aliquam sem. Non odio euismod lacinia at quis risus sed vulputate

odio. Purus faucibus ornare suspendisse sed. Turpis egestas maecenas pharetra convallis posuere

morbi. Nec feugiat nisl pretium fusce id velit ut. Nunc congue nisi vitae suscipit tellus mauris a diam.

Posuere sollicitudin aliquam ultrices sagittis orci. Urna nec tincidunt praesent semper. Turpis nunc

eget lorem dolor sed viverra.

lacus suspendisse faucibus interdum posuere lorem. Quam id leo in vitae. Ut faucibus pulvinar

elementum integer enim neque. Id ornare arcu odio ut sem nulla pharetra diam sit. Molestie ac feugiat

sed lectus vestibulum mattis. Ipsum nunc aliquet bibendum enim facilisis. Euismod nisi porta lorem

mollis aliquam ut porttitor.

DeFi’s Secret Cash Flow Machine

  • In Sept. 2020, Metamask announced its native swapping feature that gets quotes from multiple DEX aggregators to give users the best execution prices available on-chain. With this move, Metamask became an aggregator of aggregators — or a “meta” aggregator (pun intended).
  • Metamask levies a 0.875% fee on each swap, which is exorbitant by DeFi standards. And this has resulted in over $200M in revenue over the last 11 months. The simple UX of swapping via the Metamask plug-in seems to trump the ludicrous fees the wallet charges for trades.

  • If you don’t think $200M in revenue over 11 months is a remarkable feat — which you should — compare Metamask’s revenue to that of two of the top DEXes on Ethereum: Sushiswap and Curve. Sushiswap has made just under $70M YTD, while Curve sits around $12M.
  • Now consider this: Metamask’s customer acquisition cost (CAC) is a big, fat zero. Metamask has no token incentives or emissions, so there’s virtually no cost to their revenue. Their profit margins are close to 100%. Imagine if they had a token.
The (Fee) Race to the Bottom

  • Uniswap’s market share among Ethereum spot DEXes hit a record high of 72%.
  • The introduction of a new low-fee tier was a recent catalyst. On November 13, Uniswap launched its new 0.01% fee tier, making Uniswap’s stablecoin quotes among the most competitive in DeFi. As observers have pointed out, this likely marks the beginning of a fee-centric race to the bottom.
  • On centralized exchanges, traders are always looking for ways to move into a lower fee bracket. Trading fees on Binance and FTX are far lower than on DEXes. As liquidity in the space grows and attracts serious players, DeFi’s evolution into a fee-competitive market is inevitable.
DEX Aggregator Wars

  • 1inch is still the leading DEX aggregator by a large margin. However, competitors such as Matcha and Paraswap are starting to eat into its market share.
  • 1inch had its second-best month ever in October, with $13.8B in volume. But Matcha and Paraswap — once-distant competitors — saw $3.5B and $2B in volume, respectively.
  • Aggregators are a crucial piece in enhancing the UX of using DeFi-native liquidity. Watching how this shapes up is likely to be a key theme going forward.
  • On the bright side, aggregator volume is back on the rise after a period of contraction in Q3. DEX volumes are on the same trajectory, and despite pathetic price action amongst DeFi majors, their fundamentals and usage are looking brighter than ever.
Notable Tweets

Terra’s grand entrance into crypto gaming

Some perspective on leverage for the friendly apes

A new bill to undo the mess in the Infrastructure bill

Create a free account to continue reading

Go Pro at 40% off

Immediately access the entire catalog of research for Delphi, Office Hours & private Discord