September 6th, 2023
MetaMask, the globe's largest self-custodial hot (internet-connected) wallet boasting over 22 million users, has introduced the option for users to transform cryptocurrencies into traditional currencies such as USD, as an increasing number of web3 participants work towards rendering digital assets practical in the physical world.
Wallets that empower users with complete control over their digital assets, thereby being "self-custodial," are gaining popularity following the downfall of FTX, which revealed the shortcomings of centralized exchanges. The obstacle is that they have traditionally been challenging to navigate due to their requirement for a particular level of technical expertise, but entities like MetaMask are striving to enhance user-friendliness.
The cash-out feature initially supports the conversion of only ETH, the planet's second-largest cryptocurrency, into various traditional currencies that vary depending on the user's location. Initially, users choose their residing country. They subsequently determine the amount to cash out, at which point they will be presented with a roster of third-party "off-ramp" providers, including MoonPay and Transact — the latter of which already facilitates MetaMask's cash-in, often referred to as the crypto world's "on-ramp" process.
From this stage onwards, MoonPay takes charge, calculating the exchange rate and transferring the ETH to the user's designated bank account. Within a matter of minutes, the funds will be visible in the bank account. Users also have the option to withdraw to platforms such as PayPal, which is already a collaborator with MetaMask and facilitates its on-ramp process.
The off-ramp alternative could potentially expedite MetaMask's widespread adoption, provided that the solution proves to be seamless and cost-effective for the average user. However, transaction fees can accumulate rapidly.
For instance, users are responsible for the network's validator fees, which are remitted for processing transactions on the underlying decentralized network. Additionally, they will likely incur a transaction fee payable to MoonPay or other cash-out service providers. Let's examine how the expenses are divided, as illustrated in MetaMask's demonstration, using MoonPay in the United States:
The user opts to withdraw 0.05 ETH
0.00021 ETH is allocated to the validator fee
0.0458 ETH is sold
This results in an extra transaction cost of 0.00399 ETH, which equates to roughly 8% of the overall transaction amount. Not an insignificant fee.
Naturally, the transaction fees will fluctuate among users depending on the available withdrawal partners in their respective regions. The feature is being initially rolled out in the United States, the United Kingdom, and select European regions, "with intentions to broaden the scope to cater to our global user base," in accordance with MetaMask's official announcement.
MetaMask isn't the sole entity striving to simplify the process for users to utilize their crypto holdings. Recently, Insight, a blockchain network recognized for its low transaction fees, introduced a Mastercard that enables users to expend cryptocurrencies from their self-custodial wallets in Europe, with plans to extend this service to the United States and Hong Kong.
Source: TechCrunch