Arguably no piece of software has been more central to the most recent crypto craze than MetaMask. With tens of millions of users, the digital wallet system has become the main access point to Ethereum, the blockchain that has given rise to stablecoins like Tether, play-to-earn games like Axie Infinity, metaverses like Decentraland, and NFT projects like the Bored Ape Yacht Club.
But after a precipitous crypto crash that has affected projects and people alike, the co-founders of MetaMask are now warning that the crypto ecosystem they helped create is currently an unsafe casino prone to Ponzi-like operations and exploitation.
“It feels too little too late, but putting your money in cryptocurrencies is gambling,” MetaMask co-founder Aaron Davis, who goes by the pseudonym “Kumavis” online, told Motherboard. “I'm not saying what we have right now is the future of finance and [you should] move your life savings over. A lot of people are advocating that and I think that is extremely dangerous behavior.”
MetaMask launched in 2016 as part of a broader push within ConsenSys, an influential technology company dedicated to funding crypto projects and developing applications and services for the Ethereum blockchain. As the MetaMask project reaches its six-year anniversary, Davis and his MetaMask co-founder spoke with Motherboard in their first joint interview about the state of MetaMask and the crypto ecosystem, which is currently sorting through the financial wreckage of the past six months.
“There are so many different kinds of failure that are happening all the time.”
Davis, a digital nomad who currently resides in Hawaii, said it was not clear when he first started developing the MetaMask system that Ethereum would become “so primarily financial,” and that he’s “100 percent not surprised” by the recent crash of projects that complex investing schemes based around "Ponzimonics” and play-to-earn games because of the “explosion of creativity and experiments.”
Dan Finlay, the other MetaMask co-founder, agreed, saying the number of issues in the ecosystem is clear to anyone paying attention.
“There are so many different kinds of failure that are happening all the time,” said Finlay of the crypto ecosystem.
Finlay—whose first coding idea was a “fart synthesizer”—said last year’s NFT boom created a bounty of great art, but that areas of the crypto ecosystem got “caught in a loop” of creating 10,000 NFT profile pictures using similar smart contracts, which he said showed “a lack of creativity.” (He described an NFT as “a form of a direct-to-consumer sale of an imaginary good.”)
MetaMask wallets played a critical role in the rise of DeFi and NFTs the last few years, which in turn grew MetaMask’s own monthly active users from 1 million in 2020 to more than 30 million people this year, the company said.
Many of those projects have floundered in recent months, harming investors. But while Finlay said he is doing what he can to make crypto “safer for the next round of experimentation,”—a theme he and Davis reiterated extensively during the interview—he also laid blame for many of the most public failures such as the bankruptcies of the brokerage Voyager and loan company Celsius on bad actors who were not acting in line with the crypto ethos of transparency.
“A lot of the collapses that happened during this last round were things that were branding themselves as DeFi but then were actually kind of operating as shadow banks with massive leverage. And those aren't transparent. And so there's no way that anyone investing in those was ensuring any transparency,” Finlay said.
“It’s by definition impossible for us to wrap the whole thing into one unified bow and enforce it in a direction.”
Finlay understands that exposure to internet Ponzi schemes can be harmful to the average person, he said. But MetaMask can only do so much when it comes to stopping bad actors since they are developing “an increasingly pluralistic digital space, he said.
“We can't stop people from making Ponzis on blockchains,” he admitted. “It’s by definition impossible for us to wrap the whole thing into one unified bow and enforce it in a direction.” He described that misconception as a result of the “flattening global narrative” perpetuated by social media and the news that makes people believe top crypto leaders alone can “fix the ecosystem.”
MetaMask is doing what it can, the co-founders said, including by making online crypto relationships more “consensual” and making it “harder for unreputable things to gain credibility,” noting that MetaMask doesn’t auto-detect many tokens that are airdropped into people’s wallets, which can worsen phishing attacks.
“We can't ban the Ponzis, but we can deprive them of the precious oxygen of exposure,” Finlay said.
But Finlay also put the onus on users who become victims of polished projects that promise safe returns, but are often precarious houses of cards. Individual users will need to be “the change that they want to be in the system” and not “perpetuate or participate in things that are greedy,” he said.
The crash has led to a slowdown in MetaMask activity, according to the co-founders. “Obviously, it's mellower,” said Finlay, who lives in the Pacific Northwest. “A lot of our activity is related to market conditions. And there was a big retraction lately, so a lot of people I think are kind of in a tough situation, figuring out what they're going to do next.”
In the context of declining users, Davis said MetaMask has tools to “nudge user behavior a bit,” which he realizes is a dangerous power. “If we were to be bad actors, we could encourage people to gamble. That's not what we want to be,” Davis said, before adding that he sees "prediction markets" as one arena that could help MetaMask increase user activity moving forward. Prediction markets are by definition a form of gambling, as they feature an anonymous crowd betting on the outcomes of world events.
Ultimately, though, the pair see MetaMask as being an agnostic tool akin to a web browser. "Your browser's just kind of getting out of the way. It's just there to enable you to do whatever you want," Davis said.
MetaMask is also a common avenue for traders to get hacked, potentially losing all of their investments. Over the past year, crypto users, particularly in the NFT space, have dealt with a series of phishing hacks that have lost people hundreds of thousands of dollars as a result of a bad click, connecting their wallets to a scam site and allowing it to transact from their wallet.
Actor Seth Green and other owners of Bored Ape NFTs in particular have been repeatedly hacked with little to no recourse, since blockchain transactions cannot be reversed by design. In Green’s case, he paid $300,00 to have his Ape picture returned. Finlay attributed the situation to “transactions not being readable enough.”
The series of episodes has revealed that the a lot of the current crypto system does not have “sufficient security for a billion-dollar industry” and is “not a great foundation for a financial system, because it just puts a big target on those people's backs,” said Finlay.
Finlay said the ecosystem is currently in a “weird middle phase” where people are not good at staying in control of the cryptographic keys that rule their wallets. But, he maintained “as long as they are, they truly are in control.”
“So yeah, phishing is a problem,” he continued. “But I think we've got a lot of plans for how to make that more and more resilient.”
MetaMask said it is working to improve security, and Davis, for his part, said he dedicates all his time to such issues these days, since the effects of a scam in the crypto space can be so devastating. “The impact of a security failure in crypto right now [is] severe,” Davis said. “So you need to have everything tied up really tight. Because there's not much you can do once an incident [has] happened.”
A lot of what MetaMask has planned to make using crypto more safe and comprehensible also sounds like making it more complicated for the user. That includes more choice, they said, including the security model they select, the ledgers they participate in, and the contracts they choose to interact with.
But Finlay also said that the crypto space gets unwarranted criticism for its security issues because of the financial risks people take with the technology.
“Sometimes crypto gets a reputation like we're causing a lot of computer insecurity,” he said. “But I think what's really happened is we've made digital systems so valuable that we have revealed that the modern computer systems are not secure.”
“We've made digital systems so valuable that we have revealed that the modern computer systems are not secure.”
By creating an easy-to-use tool that plugs people into digital money that can be irreversibly gone in a flash, MetaMask's co-founders are aware that they've opened a Pandora's Box of sorts. “Let’s say you stole that private information or emails or whatever, now you gotta find a buyer for it or something like that,” said Davis. “But here, it is just cash. You run away with the cash basically. So it increases the stakes, and the security holes that were always there are abused.”
And, they admit, closing it won't be easy.
"We kind of uncovered the nasty truth that our computer systems are basically not very safe, and the average person, if directly targeted, can be exploited. And we're kind of starting to reverse engineer a secure computing stack,” Finlay added. “We haven't seen the middle ground where we enable creativity, but keep people safe at the same time.”
Even after a crash that has severely contracted the crypto space, Finlay is looking past it and into a glorious, world-encompassing future for crypto, even helping solve some problems historically solved by national governments.
“We will know that maybe we or somebody else did something right, when we have addressed climate change or there's better social equality. Those are my two longest term hopes for the ecosystem,” Finlay said. “Obviously, I'm not saying crypto will solve global warming, but I'm saying, that would be my ultimate hope for it. That we get creative about, you know, maybe some collective organizing thing and crowdfunded thing, and, you know, maybe we build some big carbon capture, and maybe we can beat governments to self-regulating, because, from my perspective, they're really, really failing at that. And we need creativity happening.”