TVL grew by US$600 million in two weeks, surpassing Base. What are the "hidden problems" behind Metis's rapid growth?

The surge in Metis TVL is mostly attributed to the token rally and the Grants program.

Written by Aleks Gilbert, DL News

Compiled by: Felix, PANews

Key Points

• The value of cryptocurrencies bridged to Metis was around $700 million in the past week, surpassing popular competitors such as zkSync and Base *The development of Metis’ DeFi ecosystem is much slower
• Metis boom comes after announcement of a new Grants program

Since December 20, Metis network TVL has increased 7 times, ranking third among Ethereum Layer 2 networks. But the seemingly rapid growth of TVL is not due to users eager to try the blockchain that has been launched in 2021, but due to the increase in the price of the METIS token and the Grants program launched to encourage developers to build on the blockchain.

On December 18, Metis announced that it would inject 4.6 million Metis tokens (worth nearly $400 million at the price on January 4) into a Grants program to attract developers.

Blockchain data shows that on December 20, Metis minted 4.6 million METIS tokens on the Ethereum network. Two minutes later, 4.4 million coins were transferred to Metis. These tokens are now worth approximately $380 million, equivalent to half of Metis’ TVL.

Metis’ move is highlighted by popular metrics such as TVL (the value of a cryptocurrency stored on a blockchain or blockchain application), which can easily reverse or create the illusion of a potential surge in popularity.

To be sure, interest in Metis has surged since news of the Grants program was announced. The number of crypto wallets using Metis has more than doubled in the past two weeks to 6,500. This shows that the protocol can still use ecological development funds to attract capital rather than through airdrops.

Metis’ Grants program will begin distributing tokens sometime in the first quarter of this year.

According to L2BEAT data, the TVL of the Metis network exceeded US$100 million on December 20, and it just ranked among the top 10 Ethereum Layer2 networks. On December 21, the TVL became US$229 million. Today, more than $700 million in TVL cryptocurrencies are bridged to Metis, which is lower than the Arbitrum and Optimism networks, but more than the Base network.

Despite the amazing TVL, relatively few people are actually using the Metis blockchain.

According to DefiLlama data, of the $680 million bridged to Metis, only $80 million was used to develop its DeFi ecosystem, and half of it was used for the lending protocol Aave.

Metis’ DeFi ecosystem TVL exceeded $80 million this week

This ratio is much lower among the other top five Layer 2 networks.

For example, of the $9.8 billion in cryptocurrencies bridged to Arbitrum, nearly one-third (approximately $2.9 billion) is used in its DeFi ecosystem.

While half of Metis’ TVL comes from newly minted tokens, much of its growth also comes from the surge in the price of its Metis token (METIS), which is up more than 200% since December 20.

In addition, according to DefiLlama data, since December 20, although the value of cryptocurrencies (including METIS) in the Metis ecosystem has increased by 87%, the number of METIS tokens in the DeFi ecosystem has decreased by 40%.

Metis isn’t the only Layer 2 blockchain to see explosive growth this month. The TVL of the Manta network, launched in September 2023, increased by 1250% in December.

Manta Network TVL growth comes from airdrop hunters who use the Manta blockchain in hopes of qualifying for future airdrops.