In today’s edition, we’re briefing you on the latest with Mantle, with some insights from Jordi Alexander, CIO of Selini Capital and also Alchemist at Mantle.
$MNT has seen a bit of action lately, and with EIP-4844 coming up, it may be more rewarding to research the nuances between top competing L2s. Mantle’s user-oriented approach is playing out, with its double yield $mETH LSP gaining traction and a growing ecosystem of interesting dApps.
Stay alert, stay informed ⬇
Origins of Mantle
Initially known as BitDAO, it operated as a semi-independent entity attached to Bybit with a focus on investments.
BitDAO currently has the largest treasury in DeFi, sitting at over $2.75B. Notably, $MNT comprises almost 80% of this figure.
To this day, Bybit has contributed more than $600M USDC/USDT and 177k ETH to the BitDAO treasury.
This is more than enough to support the development of BitDAO’s initiatives. Most notably, this includes the Mantle EcoFund, which entails $100M in funding coming from BitDAO’s treasury ($200M in total with funds from investors).
Mantle EcoFund Breakdown
Going forward, Bybit will still remain an important sponsor and partner.
Bybit can contribute specifically in the areas of product ideation, bootstrapping product development, user onboarding, and product distribution.
However, after observing issues with investment-focused approaches (e.g., 3AC), they decided to pivot towards being more product-focused.
The rebranding from BitDAO to Mantle represented this shift, with Mantle being a layer-2 of Ethereum.
The token was converted from the old $BIT to the new $MNT to align with the fresh start and product-focused direction.
The decision to convert tokens from BitDAO to Mantle was driven by the desire for a fresh start and emphasis on product development.
Although many people were attached to the name "Bit," they recognized the importance of rebranding for clarity and focus.
The token conversion involved migrating from the old $BIT to align with Mantle's vision.
This transition allowed them to upgrade their approach and fully embrace a product-focused strategy.
Why Was Mantle Created?
Jordi Alexander, Alchemist at Mantle, says that as most liquidity and activity are happening on Ethereum, it makes sense for a layer-2 solution to be part of that ecosystem.
Building on Ethereum provides security and allows for easy bridging to the main Ethereum network.
Mantle’s decision to build its own chain is driven by the goal of being a product-focused DAO.
By building on Ethereum, Mantle can leverage its existing mindshare and security.
Many other major layer-2 solutions are primarily focused on technology development.
Mantle takes a different approach by prioritizing end-user experience and focusing on building a safe app environment with ample liquidity and support.
While partnering with other layer-2 technologies for their technical expertise, Mantle aims to provide the best user experience rather than solely competing on technology advancements.
Jordi says that many apps deploying on other layer-2 solutions lack strong partnership networks and business development focus.
By prioritizing these aspects, Mantle gains an advantage in attracting apps and users who value a strong ecosystem with robust support.
While technology-focused layer-2 solutions have their merits, Mantle's focus on user experience sets it apart as a unique player in the market.
Mantle has adopted a modular approach; the early adoption of technologies like the Eigenlayer contributes to Mantle's focus on making transactions cheaper and improving user experience.
Jordi also emphasizes the importance of affordable transaction fees for users.
Mantle Ecosystem
Init Capital is an intent-based borrowing and lending, taking inspiration from Uniswap's hooks feature.
The team behind Init Capital is described as highly skilled, and more details will be announced soon.
Butter is a decentralized exchange built on Mantle with a gamified approach.
It offers unique features and has a strong development team.
Merchant Moe aims to be an equivalent version of Trader Joe but with its own separate token ($MOE, airdropped to JOE stakers ).
It provides trading opportunities with a focus on blue-chip assets.
10% of the tokens will be distributed to Trader Joe users as an extra airdrop.
He adds that Merchant Moe is not just a rebranding of Trader Joe; it is built on Mantle and has its own separate team.
The decision to create Merchant Moe was influenced by the Mantle platform, not any legal issues related to Trader Joe.
The mETH Lab for yields
One key project on Mantle is MethLab.
MethLab describes itself as an intent-based protocol, offering next-gen forms of non-liquidation borrowing.
Notably, MethLab is drawing attention for it’s UI where users, (or perhaps ‘players’) walk around a virtual MethLab instead of simply navigating a webpage.
the v1 is in testnet, designed by Jordi Alexander.
The project has plans for leverage in the future.
Metlab’s gamified UI
Jordi explains that mETH Lab is an upcoming lending and borrowing feature on Mantle.
It offers a unique approach where users can specify the desired yield they want to achieve.
Instead of starting with collateral, the focus is on determining the desired yield and then adjusting the requirements accordingly.
He adds that this approach allows for more flexibility in borrowing against tokens like $mETH.
There is no liquidation mechanism, making it a safer option without the need for oracles.
Jordi says that non-liquidation mechanics, similar to those used by Timeswap, offer exciting possibilities.
Shared lending protocols have not fully explored this use case yet.
As markets become more volatile during bull runs, there is significant potential for innovative lending solutions.
He adds that the Meth Lab product is being built by the Core Mantle team, and is one of the Showcase apps.
The team has extensive experience and expertise in building innovative solutions.
$mETH and 2x average staking yield
mETH is similar to other liquid staking protocols like Lido.
It allows users to stake their $ETH and receive receipt tokens that can be used in DeFi applications.
The development team behind $mETH has significant experience and has conducted thorough audits for security.
Similar to Lido, mETH offers a liquid staking protocol where users can stake their ETH and receive receipt tokens for use in DeFi.
The team aims to become a strong competitor in this space by targeting the number three spot among liquid staking providers.
They want to offer users more options, encouraging them to switch from existing solutions or start staking their ETH for the first time.
The team aims to provide the highest yield compared to other competitors.
They announced a double dose yield drive for the first 250,000 ETH staked in $mETH, effectively doubling the yield from 3.6% to 7.2%.
The double yield will be paid natively in $ETH, not in another token.
The treasury's yield funds this initiative, and they are confident in its sustainability.
Partnership with Ondo Finance (mUSD)
A partnership exists between Mantle and Ondo Finance regarding the $USDY product.
Native yield can be generated within DeFi applications using $USDY without needing KYC verification.
Previously, accessing similar products required KYC verification, but now it can be done permissionlessly.
An ideal layer-2 environment should include native building blocks that generate yield.
Mantle has partnered with Ondo to mint $USDY, a stablecoin that provides treasury yield.
The Mantle team appreciates Ondo’s approach, as they are regulated and have extensive experience in the space.
Users can access $USDY on Mantle without needing to go through KYC verification.
Users can access $USDY on Mantle without having to go through the complex process of minting it themselves.
A large portion of the treasury funds has been allocated to mint $USDY, making it more accessible.
$mUSD is a one-to-one pegged dollar coin exclusively managed by Ondo for Mantle.
Some apps may prefer using $USDT due to its non-rebasing nature, while others may opt for rebasing tokens like $mUSD.
Partnership with Ethena Labs
Ethena Labs is a stablecoin project that utilizes liquidity for perpetuals.
It offers two sources of yield - $stETH and funding rates from shorting.
Despite being controversial due to its use of centralized exchanges, it remains crypto-native.
It’s collaboration with Bybit was driven by their large open interest and integration with $mETH as collateral.
Users can buy $mETH for yield or create a neutral position by shorting ETH Perpetual.
Perpetual exchanges have funding rates where longs pay fees to shorts.
Positive funding rates are common during bull markets, resulting in significant fees paid by long positions.
Once Ethena goes live, higher yields are expected due to positive funding rates.
On-chain perpetual mechanisms are limited currently, but there is potential for growth in the future.
Utility of MNT token and why to stake MNT
MNT serves as the gas token for using the Mantle Network.
Gas fees are paid in $MNT, although efforts have been made to optimize gas usage.
Future plans include staking $MNT to receive airdrops from Ecosystem Fund tokens associated with Showcase apps.
Being a Showcase app means that Ecosystem Fund has invested in them as a normal VC investment.
He adds that similar strategies have been successful with other projects like ATOM holders receiving airdrops from Cosmos chains aligned with their ecosystem.
Injective and Celestia are examples of tokens that have seen price increases due to people playing this game.
Mantle acknowledges the speculative nature of the cryptocurrency market and the advantages that projects without live tokens may have.
Some layer-2 solutions could potentially be valued similarly to Mantle, resulting in significant market capitalization.
To address this, Mantle aims to reward long-term stakers with future airdrops from protocols built on their platform.
Unlike other projects with unlock periods for token holders, Mantle made the decision to fully vest all tokens immediately from day one.
This eliminates concerns about large token holders waiting for unlock dates to sell their holdings.
The absence of unlock periods is seen as an advantage rather than a disadvantage.
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