Understanding Mantle: A Comprehensive Overview

Key Insights

• Mantle is an ecosystem consisting of Mantle Network (an Ethereum L2), assets (ETH-based, USD-based, and BTC-based), governance, and treasury (an EcoFund and economic committee).
• Mantle, formerly BitDAO, launched in January 2023 and inherited BitDAO's $3 billion treasury. Mantle has the second-largest treasury in the industry.
• Taking a modular blockchain approach, Mantle Network utilizes Optimism’s OP Stack Bedrock and Cannon while deriving technology from EigenLayer’s DA into a Mantle DA variant.
• Mantle recently announced cmETH, a new restaking solution for users, and COOK, a new governance token that gives holders of mETH and cmETH an active role in governance decisions.

Introduction

L2s continue to contend for market share in the Ethereum ecosystem. Despite the popularity of leading networks such as Arbitrum and Optimism, the landscape remains highly competitive, with over 30 active L2 networks vying for users and liquidity. As a result, users and developers face challenges in choosing the optimal network amidst such a fragmented market.

Every network introduces some tradeoffs in scalability, security, cost-efficiency, and ease of use. Many existing L2 solutions struggle to balance these requirements, leaving gaps in the market for more innovative approaches.

Enter Mantle. Mantle distinguishes itself by expanding beyond a traditional L2. It has a differentiated approach to the ecosystem through strategic products and partnerships, resulting in more convenience to the user and applications. Its cost-efficient model provides a reliable experience for developers and users alike. Additionally, Mantle's ecosystem includes five tokens — MNT, mETH, FBTC, and the upcoming cmETH and COOK (expected in fall 2024) — along with a $200 million EcoFund to incentivize application development on its platform. By addressing the complications within the L2 landscape, Mantle presents a comprehensive solution poised to redefine scalability and usability.

Background

In June 2022, BitDAO proposed the incubation of Mantle. Its first Testnet went live in January 2023. With the backing of Peter Thiel and Pantera Capital, BitDAO fully merged into Mantle in May 2023 to streamline its focus on L2 scaling solutions. The Mantle Network Sepolia Testnet launched in January 2024.

During the merge, Mantle inherited BitDAO’s sizable treasury as well. As of June 2024, Mantle's treasury consists of $3.01 billion, including $2.27 billion in MNT, $670.45 million in mETH, $78.97 million in wETH, and $26.65 million in USDe.

One of Mantle’s initial actions post-merger was to convert the original ERC-20 BIT token into ERC-20 MNT. Post conversion, Mantle burned 9.86 billion ERC-20 BIT, which was 98.6% of the maximum supply, to increase the value and demand of its new token. Shortly after, Mantle launched its mainnet in July 2023, with additional features like the Network Bridge and Mantle Journey following soon thereafter. Mantle also introduced a multi-signature feature in September 2023 and Migrator V2 in September 2023, as detailed in MIP-27.

In November 2023, Mantle Liquid Staking Protocol (LSP) Alpha was announced, allowing users to stake their native ETH for mETH on Ethereum. In March 2024, Mantle Network’s Tectonic Upgrade (V2) was completed, which included fixed block schedules and the removal of TSS (Threshold Signature Scheme) nodes. Furthermore, after the Mantle V2 Tectonic upgrade, MNT became the native token of Mantle Network, replacing its previous status as a bridged version of the Ethereum ERC-20 token.

Technology

Mantle Network's technology leverages Optimism's rollup design to facilitate its modular architecture. Since its inception, Mantle has had two versions of its technology stack, with the latter having implemented substantial changes to the structure.

Mantle V1 Alpha launched in July of 2023, utilizing the OVM codebase by Optimism to introduce modularity to the Network. While it was live, Mantle identified a few obstacles that needed addressing. For example, V1 lacked support for EIP-1559, an Ethereum upgrade that changed how transaction fees are calculated. Without the upgrade, users would have to bid against each other to have their transactions processed, leading to high and volatile fees. Also, without EIP-1559, block generation was dependent on the number of transactions. Only one transaction per block caused delays, higher costs, and variable block times.

To address this, Mantle V2 Tectonic was launched in March 2024, transitioning to Optimism's OP Stack Bedrock. With EIP-1559 integrated, Mantle users benefit from base fee adjustments, which set a standard fee based on network demand. An optional tipping mechanism was created for users who preferred faster transaction processing. Also, block generation is now transaction-independent and fixed at 2 seconds, allowing multiple transactions per block.

While Mantle utilizes Bedrock's technology, it has also developed its own solutions and outsourced specific components. For example, Mantle adopted EigenLayer's DA technology, eliminating the need for cross-chain bridges and making MNT a native L2 asset.

Breakdown of the Mantle Network

Currently, in V2 Tectonic, the Mantle Network architecture has three key components:

• Optimistic Rollups: Scalable, low-fee offchain transaction processing.
• Fraud Proofs: Maintains transaction integrity and security.
• Mantle DA: A variant of EigenDA aiming for accessible and verifiable data.

Optimistic Roll-Ups

Optimistic rollups (ORs) are designed to improve Ethereum's throughput by processing transactions offchain. They are "optimistic" because they assume these offchain transactions are valid without initially providing proof of validity. Instead, they rely on fraud proofs to verify transactions if discrepancies arise. The ultimate goal of ORs is to increase transaction speed and efficiency on the Ethereum network.

Mantle's flagship product, Mantle Network, uses an optimistic rollup architecture aligned with the Ethereum Virtual Machine (EVM). By integrating Bedrock and security through Ethereum's consensus, Mantle Network establishes censorship resistance and allows direct, third-party-bridge-free asset transfers to and from Ethereum.

Mantle secures its solution by way of fraud proofs for validation leveraged by Cannon, a product by Optimism. Mantle validates blockchain transactions using a system called MIPS, which functions like a virtual computer to simulate EVM instructions.

In current fraud-proof models, the onchain validators that handle disputes can only run instructions in simpler virtual machines like MIPS or WASM. Therefore, the EVM client, such as op-geth, converts fraud proofs into a simpler language, like MIPS-opcode, for the validators to understand. Cannon uses an onchain contract to simulate MIPS-opcode, allowing the EVM to check if MIPS instructions are executed correctly. Simultaneously, it uses an offchain simulator to create proofs for any MIPS instruction, completing the verification process.

To summarize, optimistic rollups increase transaction throughput, while fraud proofs ensure integrity. Next in the stack is the data availability layer, which guarantees access to the necessary data to verify these proofs.

Data Availability Layer

Mantle has partnered with EigenLayer to improve data availability and protection by utilizing EigenLayer's re-staking and validation mechanisms. With 10 MB/s of write throughput, EigenLayer offers five times the capacity of its nearest competitor. Furthermore, EigenLayer’s decentralized structure is supported by hundreds of operators with delegated stakes, ensuring high security and imposing economic costs for misbehavior. Leveraging these advantages, Mantle developed its own Mantle DA module, built on EigenLayer technology, to further strengthen data availability and security for its native network.

Mantle DA

Mantle DA allows permissioned nodes to provide data availability services to the network, secured by staking MNT. The Mantle DA has three main characteristics.

First, the data availability layer is separate from the consensus layer. This setup allows the data availability layer to focus on storing and distributing data. Meanwhile, the consensus layer can concentrate on verifying and agreeing on transactions without the burden of data storage tasks.

Second, Mantle DA uses a unicast (one-to-one) channel for direct communication. By sending information to the intended recipient rather than broadcasting to the entire network, it reduces unnecessary data traffic, which lowers bandwidth usage.

Lastly, Mantle DA employs an erasure rate system to keep multiple copies of data fragments. These fragments, which contain transaction and state data, ensure data integrity by allowing validators to reconstruct the complete information if some fragments are lost or damaged. By using both L1 and L2 sources, this system provides redundancy and aims to maintain secure data storage.

The integration of EigenDA on Mantle Sepolia Testnet was launched on July 11, 2024 while the launch date for mainnet integration has yet to be announced.

TokenomicsMantle Token Breakdown MNT

MNT, Mantle’s native token, is the underlying asset on the Mantle network. It serves dual roles as a governance and utility token, giving holders voting rights and practical functionality such as gas fees and collateral on the network. Additionally, MNT can be locked for rewards and used in DeFi applications for lending and borrowing. Its diverse utility supports various ecosystem activities, reinforcing its role as Mantle’s governance and ecosystem growth token.

As of June 2024, the maximum supply of MNT tokens is 6.2 billion. The initial distribution of MNT tokens is as follows: the Mantle Treasury holds approximately 2.9 billion tokens, and the circulating supply is about 3.3 billion tokens. The Treasury’s 2.9 billion MNT tokens represent approximately 47.8% of the total supply. The current distribution is 49% to the Mantle Treasury and 51% in circulation with no vesting. MNT trades on 27 exchanges, with Bybit being the most traded centralized exchange (CEX). Bybit represents 90% of its CEX market share, while decentralized exchanges like Uniswap support trading.

The Mantle Governance process oversees MNT token distribution from the Treasury with a strict budgeting and capital call procedure highlighted in the BIP-19 Mantle Network budget. MNT token distribution focuses on boosting adoption through user incentives like achievements, quests, and rewards. It encourages infrastructure providers, protocol partners, and dApps via technology partner incentives. Tokens are allocated to the core contributor team, and strategic opportunities such as acquisitions or token swaps are also included. Lastly, each token has equal voting weight for DAO decisions.

mETH

One of Mantle's core products is mETH, a token that represents staked Ethereum within its Liquidity Staking Protocol (LSP). The LSP collects ETH from users who have staked and, in return, gives them mETH tokens, which earn rewards over time. This process enables them to earn staking rewards while liquidating their staked assets. As of June 2024, the exchange rate of mETH to ETH is 1 mETH, equivalent to 1.037 ETH.

Holders of mETH can access various DeFi platforms for liquidity pools, yield farming, and other financial activities without unstaking their ETH. Below are a few examples of dApps available for users today.

• For trading, Bybit offers mETH/USDT and mETH/ETH pairs, while NativeX provides the mETH/WETH pair and other swap options.
• In lending, INIT Capital allows deposit/borrow positions with ETH, Timeswap leverages ETH as collateral, and MYSO Finance offers zero-fee swaps and custom zero-liquidation loans.
• Vaults include Range Protocol's mETH/WETH vault, Circuit Protocol's auto-compounding vault for Lendle's market, and Rivera Money's mETH-ETH LST vault.
• For providing liquidity, Merchant Moe provides various liquidity pools, and Butter.xyz allows liquidity to be added to any available tokens, including ETH and MNT.

Mantle has demonstrated a strong commitment to delivering competitive yields. The "mETH Double-Dose Drive," running from December 2023 to April 2024, doubled the market yield for ETH liquid staking protocols to 7.2%. Due to strong user traction, Mantle increased the initial cap from 250,000 to 333,333 mETH just one month into the program and then again in March 2024 to 600,000 mETH. This initiative, funded by Mantle Treasury's staked ETH, enhanced returns for early users. With a TVL approaching $2 billion, mETH has become the fourth-largest liquid staking offering in the market. As of June 16, 2024, the yield has dropped to 3.3%.

There have been two different approaches for restaking in the network. First, in April 2024, mETH holders could restake through EigenLayer's EIGEN distribution. To qualify, users needed to hold mETH on Mantle L2 from February to April 2024. For example, if a user has 50 mETH, they would have 44,000 Eigen Points, which then would convert into 19.24 EIGEN. Additionally, Mantle introduced a new liquid restaking token, cmETH, and a governance token, COOK, as part of its native restaking protocol.

cmETH

In May 2024, following the success of their restaking initiative, Mantle Network integrated cmETH and COOK through the passage of MIP-30, with 198 million MNT voting in favor and 2,800 MNT against. The strategy was to make mETH restakable, leading to cmETH's development and bringing native yield opportunities to the Mantle Ecosystem. cmETH is designed for high composability within Mantle dApps and addresses liquidity fragmentation issues in early restaking models. cmETH functions similarly to mETH, to be used in various DeFi protocols and use cases. It aims to establish the same partnerships and integrations as mETH, potentially becoming the preferred asset within the ecosystem.

Ongoing discussions with ecosystem partners like Pendle and Ethena highlight the collaborative efforts to integrate cmETH, enhancing its adoption and utility within the Mantle network. Jordi Alexander, Chief Alchemist at Mantle, emphasized that “this approach ensures a clear and efficient restaking solution for ETH within the ecosystem.”

COOK

COOK, the governance token for cmETH, is designed to give the community and holders of mETH and cmETH an active role in governance decisions, such as selecting AVSs and directing integrations. COOK incentivizes participation and fosters a more engaged ecosystem.

FBTC

In May 2024, Mantle became a core contributor to FBTC, an omnichain Bitcoin asset pegged 1:1 to BTC. FBTC aims to elevate Bitcoin's utility by making it a liquid and easily composable asset across blockchains like Ethereum, Mantle, and Solana. It introduces yield enhancement strategies like Babylon Staking, intending to provide more profitable ways to use Bitcoin assets. Additionally, Mantle is a signatory in FBTC's TSS network, ensuring the creation and redemption of FBTC tokens.

Summary

Mantle Network's ecosystem includes five current and upcoming tokens:

• MNT: The native token of Mantle Network, functioning as both a governance and utility token.
• mETH: Provides native yield opportunities and aims to improve network security through staking rewards.
• cmETH: An upcoming liquid restaking token designed for high composability in DeFi protocols.
• COOK: The upcoming governance token for cmETH, enabling community participation in governance and rewarding mETH and cmETH holders.
• FBTC: An omnichain Bitcoin asset pegged 1:1 to BTC. Mantle manages its liquidity, composability, and token creation through the TSS network.

Network Activity

Trading and adoption increased during two periods due to the rollout of tokens and Mantle’s push for mass community building.

The first increase occurred from late 2023 to late January 2024. mETH and USDY came to market in late November 2023, setting the stage for increased activity. As mentioned above, mETH doubled its market yield to 7.2% in December of 2023. Initially, the cap was set at 250,000 mETH, but it was later raised to 333,333 mETH in January 2024.

This announcement was followed by the mETH and mUSD (a rebased version of USDY) Holiday Raffle in December 2023. The raffle offered substantial prizes, including 97 mETH and 115,000 mUSD, with winners standing a chance to win up to 5 mETH each. The raffle rounds attracted participation from December 22, 2023, to January 1, 2024. Additionally, inscriptions on Mantle spiked daily active transactions from late 2023 to mid-January 2024, with a peak of 2.2 million transactions and 96,700 daily active addresses in December.

The second period of increased metrics was in May 2024 to June 2024. Mantle's growth has been largely due to its restaking initiatives, such as the mETH Eigen Points and the recent introduction of cmETH and COOK. Additionally, Mantle committed $5 million to boost SocialFi and gaming innovation on the Mantle Network. This fresh funding has supported new dApps like Catizen, xMetaCene, and BladeGamesHQ. Since launching on Mantle, xMetacene has amassed 387,000 total addresses and 2.8 million transactions. In May 2024, MNT onchain holders increased by 9% from 1.59 million to 1.69 million. Also, DEX trading volume reached $93.8 million, daily transactions hit 790,900, and active addresses peaked at 194,200. Additionally, Mantle's TVL reached its highest value at $437.4 million on June 6, 2024.

Ecosystem DeFi

Mantle’s emphasis on DeFi growth is evident in its TVL, as its top 10 largest apps are all DeFi-driven.

Pendle

Pendle is a DeFi protocol that enables users to trade tokenized future yield and leads Mantle's protocols with a TVL of $117.3 M. Pendle tokens can be exchanged through Pendle’s AMM. In contrast, its governance token, vePENDLE, integrates the TradFi interest derivative market into DeFi, enabling yield strategies like fixed income, long yield, and increased yield. In May 2024, Pendle integrated principal tokens (PTs) and LPs directly into the Mantle platform, launching the first LST protocol on Mantle. When users deposit an LRT into a Pendle contract, the protocol attributes points to distribute to the holder of the Yield Token (YT). This mechanism allows users to separate the potential airdrop benefits of points from the LRT into the YT. Pendle was one of the biggest beneficiaries of EigenLayer and mETH's staking program, leading to its TVL increase of 381% since 2023.

INIT Capital

INIT Capital is a platform designed to democratize access to liquidity, providing Liquidity Hooks to support DeFi users and protocols in sourcing and maintaining initial liquidity. Since launching on Mantle Network, INIT Capital has reached $146.9 million in May 2024, a 52% increase from the start of the month. In December 2023, INIT Capital secured a position in the $200 million Catalyzed Capital Pool from the Mantle EcoFund. It now serves as the base layer for Mantle, allowing other protocols to build on it. Users can earn INIT Points, EigenLayer Points, and Ethena Sats by participating in INIT's looping hook strategies. On Mantle, INIT Capital’s market cap is $124.1 million, with total borrowings of $36.4 million.

Merchant Moe

Merchant Moe is the largest DEX on Mantle, with a TVL of $78.4 million as of June 2024. Part of the Trader Joe ecosystem, Moe aims to transform onchain trading via its liquidity book protocol. MOE is the governance token of Merchant Moe's ecosystem. Staking MOE earns users stablecoin income via sMOE and grants voting power over future MOE emissions through veMOE. Its AMM allows users to earn passive income by staking tokens in various liquidity pools. As of June 2024, Merchant Moe's Liquidity Book has a TVL of $50 million and up to $250,000 MNT rewards for users.

Agni Finance

Founded in 2023, Agni Finance is an AMM-based DEX specializing in spot trading and concentrated liquidity. As of June 2024, it has a TVL of $55 million, six tokens, and 26 trading pairs with a 24-hour trading volume of $6.43 million USD. Its most active trading pair is Mantle Staked Ether (mETH/wETH) which alone saw a 24-hour volume of $1.9 million. Agni also offers additional features, such as swapping EVM tokens supported on Mantle and allowing users to deposit idle funds into liquidity pools to earn extra trading fees.

Puff’s Penthouse

Puff’s Penthouse is a vault on Mantle Network where users convert mETH or USDT into PUFF tokens. As of June 2024, it has a TVL of $25.66 million with 280.14 million PUFF and 19.8k mETH bonded. Users lock, or "bond," their PUFF or mETH for specified periods, earning Blue Magic Tokens (BMT) as rewards. This gamified approach to staking has participants termed "Puff the Dragon" earning more "potion strength" (rewards) the longer they are bonded. Puff Penthouse's tokenomics include a total supply of 888 million PUFF, distributed across Puff Drops, Genesis Potions, Liquidity, Early Contributors, Partnerships, and Marketing.

NFTs

Accelerating the growth of Mantle’s NFT pillar has been a key goal for the network. This focus has led to the development and launch of various projects within the NFT space.

Mintle

Mintle is a secondary NFT marketplace on the Mantle Network, developed in partnership with Rarible. It offers cost-effective and secure NFT trading and features Mantle’s inaugural NFT collection, Citizens of Mantle, created with renowned artist Chen Man. Mintle showcases a dynamic marketplace with 38,700 items, 29,700 owners, and a trading volume of 1.3 million MNT, anchored by a floor price of 21 MNT ($16.77 USD).

Co-Museum

Co-Museum is an NFT community aimed at creating a platform for communally owned digital art. Inspired by his experience in art storage, Wei Yang founded Co-Museum to address the issue of priceless artworks being locked away as pure investments. Yang believed that art should be in the hands of the people, transforming these pieces into asset-backed collectibles (ABCs) to make consumer and cultural projects accessible to everyone.

Co-Museum has participated in notable events such as Art Basel Miami 2023 and Singapore's largest NFT art exhibition, Proof of Concept. At Art Basel, Co-Museum offered a free commemorative mint with Pudgy Penguins and facilitated the co-ownership of the Golden Skateboard signed by Tony Hawk. The exhibition featured works from influential artists like Tyler Hobbs, Sarah Meyohas, and Reuben Wu. As a portfolio project of Mantle EcoFund, Co-Museum continues to revolutionize the art world by making it more accessible and community-driven.

Gaming

As stated, Mantle has pushed gaming initiatives within its ecosystem, allocating $5 million to support gaming projects. Currently, the Mantle Network has several notable gaming initiatives, including:

Catizen

Catizen is a game network created by Pluto Studio that has partnered with Mantle and aims to improve in-game transactions and asset management in Web3 gaming. Within a month of its open beta, Catizen attracted 2.3 million addresses. The platform saw over 2.6 million onchain transactions, generating over $3 million in revenue. This alliance also allows users to unlock rewards up to 230,000 MNT.

Metacene

MetaCene is a gaming project on the Mantle Network, funded by the $5 million boost for gaming innovation. It connects MMORPG players, content creators, and Web3 enthusiasts to realize the vision of "Co-Entertainment, Co-Creation, and Co-Governance." Developed by founders from Blizzard, MetaCene's world is divided into three chapters: the Genesis of Fire, the Realm of Apocalypse, and the Spirit of All Things. It features ecological NFT series such as Apostle, Realms, and Treasure Box.

Roadmap

To grow the Mantle ecosystem, various initiatives and strategic partnerships have been launched to improve DeFi capabilities, engage users with new opportunities, and promote active participation.

Integrations

Mantle announced a collaboration with Vertex to enhance its DeFi applications. Vertex is a DEX specializing in spot trading, money markets, and perpetual contracts. With the exact launch date not announced, this partnership will improve the trading experience for Mantle users with latency of 5-15 milliseconds. Vertex's cross-chain liquidity solution, Vertex Edge, will address liquidity fragmentation across blockchains, and its sequencer will provide immediate liquidity access in perpetual markets. To encourage early use, 1 million MNT will be offered as trading rewards, followed by competition with Perps.ai using the same reward pool.

To drive greater adoption, Mantle collaborated with Bybit Web3 on an event from June 13, 2024, to July 13, 2024. This event allows users to win up to $15,000 and gain whitelist opportunities for future ByBit NFT projects. Inspired by upgrades in the Ethereum ecosystem, the collection features NFTs representing cities like Berlin, Cancun, Istanbul, London, and Shanghai. Collecting multiple NFTs from each city increases reward potential. There are 100,000 NFTs available, and Citizens of Mantle Community (CoM) members can participate in nearly 38,700 Mantle City Canvas NFT airdrops.

Lastly, Mantle introduced the "Season 1: Methamorphosis" campaign following the approval of cmETH and COOK. This points program allows users to earn convertible points from Mantle's LSP token, COOK. The campaign started on July 1, 2024, and will run for 100 days. Until cmETH's launch, the existing receipt token, mETH, will accrue Powder (the name for points in Methamorphosis). Additionally, there will be a retroactive COOK allocation designed in collaboration with Puff Chapters.

Closing Summary

Mantle, formerly known as BitDAO, started as an L2 scaling solution and now encapsulates a comprehensive network with five current and upcoming tokens for governance, liquid staking, and restaking opportunities. As the second-largest crypto treasury, Mantle has earmarked $200 million in its EcoFund to drive dApp initiatives across various sectors. Notably, dApps like Pendle, Merchant Moe, and Puff’s Penthouse have garnered a total TVL of over $210 million within the Mantle Ecosystem. Mantle has also made technological advancements through partnerships, like Vertex, to address users' transaction latency.

To support the network, Mantle's technology stack incorporates several components. These include the OP Stack Bedrock for consistent block times and reduced fees and OP Cannon for fraud-proof verification. Additionally, Mantle DA utilizes EigenDA technology, leveraging restaking, independent data availability, and unicast communication while maintaining the security of the Ethereum mainnet.

Mantle has experienced two spikes in network activity since inception, with fees over 280,000, driven by inscriptions and marketing initiatives for MNT and mETH holders. These initiatives include two restaking opportunities, doubling the yield on mETH, as well as airdrops on Mantle’s dApps. Mantle's roadmap focuses on DeFi and GameFi dApps growth, reducing user fees while trading and driving user engagement with restaking initiatives involving cmETH/COOK.