Today we highlight the following:
- PROTOCOLS: MetaMask Card Brings Crypto Payments to the Real World
- CURATED UPDATES: Financial Institutions and Adoption; DeFi and Digital Assets; Blockchain Protocols; NFTs, DAOs and the Metaverse
PROTOCOLS: MetaMask Card Brings Crypto Payments to the Real World
MetaMask and Mastercard have teamed up to create the MetaMask Card — a debit card that connects directly to the owner’s MetaMask account. The wallet has most recently reported 30 million monthly active users.
The card allows users to spend their digital assets anywhere Mastercard is accepted, bridging the gap between crypto and real-world payment rails. The product is initially available as a limited pilot program to a few thousands users in the UK and European Union, with plans to be fully open within these regions by the end of the year.
Here is what happens under the hood — (1) embedded fintech company Baanx acts as the card issuer, (2) Mastercard provides the payments network, and (3) Linea (an affiliated Layer-2 network) powers cheaper and faster transactions. At launch, only USDC, USDT and WETH will be supported, with the list set to expand in the future.
Users will first delegate eligible tokens to their MetaMask Card, where the funds will remain in self-custody until they are needed for transactions. At that point, the crypto is converted to fiat currency through Baanx, and the purchase is processed and executed as with any normal transaction. For USDC and USDT, the only fee to off-ramp is the Linea gas fee, which is usually a cent or two. Users that delegate WETH or other non-stablecoin tokens will be charged the gas fee plus a swap fee of 0.875% of the total amount.
This is a material step in bridging traditional and decentralized finance.
In the short-term, Web3 users can remain non-custodial while using their onchain funds for commercial activity in the real world. Additionally, users can avoid expensive offramp fees for stablecoins — typically 1-2% — and the associated delays that can take over a day to process. Longer-term, we see this as a stepping stone for self-custodial digital assets savings accounts, enabling users to make the most of on-chain yields for their digital assets, coupled with payment functionality.
Another way to put it is that primary bank accounts are already transitioning from regular banks to neobanks, and may soon enough end up in DeFi. The rewards of being the primary bank account are substantial.
We expect that this is a new vector of competition for crypto wallets, and MetaMask needs to fend off competition from newer entrants. Of particular note is Coinbase Wallet, which has been able to leverage the user base of Coinbase and its affiliated Base L2 network. This connection draws users, who in turn attract developers that create a growing app ecosystem.
Currently, Base is the second largest L2 by market share (17.2%) and typically the most active with TPS frequently in the high 40s — Ethereum in comparison currently sits at around 12.6 TPS. MetaMask has a similar opportunity if they can effectively draw in their users to use Linea as the default L2. For context, Linea currently sits in 7th in TVL with a 2.33% market share and 15th in TPS at 4.6.
We also see a broader shift to real-world payments connected to digital assets.
Apple’s iOS 18.1 for developers will offer in-app contactless transactions using the new NFC and SE APIs. These APIs enable wallets (fintech, not crypto) to be created for in-store payments, and other items like home keys, hotel keys, reward cards, or event tickets. To incorporate the solution into iPhone apps, developers are required to enter a commercial agreement with Apple, and approved vendors are granted permission to use the relevant APIs.
As a result, we could see companies combining Fintech with DeFi, and launching iOS wallets that support USDC and other stablecoins. Prior to this change, the only payment apps or wallets that used NFC on iPhones were the default Apple Pay and Apple Wallet.
Leave a Reply