During the period from June to July of this summer 2023, the market seems to be led by 2 big trends:
- Ethereum Layer 2 war, with many new Layer 2s being launched, even many Layer 1s suddenly switching to Layer 2. Especially after ETHCC, many technology stories are drawn up to upgrade the infrastructure. layer of Layer 2.
- The LSDfi wave is still hot with many new protocols being continuously released. The inflow into LSDfi protocols in July was even more than in June.
Meanwhile, Mantle Network – a Layer 2 on Ethereum that just mainnet on July 17 in the bustling atmosphere of ETHCC in Paris, is showing signs of focusing on the LSD segment right from the beginning of an ecosystem.
So what is Mantle’s vision and what can we exploit? This article will help you answer that question. To better grasp the information of the article, I encourage you to refer to previous articles:
- What is Mantle Network? Mantle Network Cryptocurrency Overview
- Overview of the LSDfi Wave Ahead
- Pendle Wars Becomes Center of LSDfi
- Weekly Panorama #14: Will LSDfi explode in the near future?
Mantle Overview
What is BitDAO
BitDAO (formerly) is the largest DAO on the market, directly backed by CEX Bybit and many other large organizations. Their Treasury holds more than $2.4B in assets (including mainly $BIT, $ETH and Stablecoins) and those assets are used to support projects in the BitDAO ecosystem.
In that ecosystem, there are 3 main projects included
- Game7 – Is a DAO component of BitDAO, specializing in developing Web3 Gaming dApp.
- EduDAO – Also a component DAO of BitDAO, specializing in educational activities through cooperation with universities.
- Mantle Network – A layer 2 Optimistic Rollup on Ethereum will begin construction in 2022 and mainnet in July 2023. To access the technical issues under Mantle’s infrastructure layer, you can refer to Mantle Network. This article is by author Huyz DeFi.
Mantle Network is focused on devoting resources to development in the summer of 2022 – when the vision of Layer 2 begins to become clear, and is also the first phase of the Layer 2 war.
BitDAO Merges With Mantle
In May 2023, the BIP-21 proposal was implemented and passed, BitDAO officially merged into Mantle Network. This merger has created many big changes:
- BitDAO brand changed to Mantle.
- BitDAO’s governance model is also used to govern Mantle.
- BitDAO’s $BIT token is automatically converted to $MNT token
- Mantle inherited all of BitDAO’s treasury (worth about $2.4B)
- Bybit has supported BitDAO in the past and will continue to support Mantle
Mantle Treasury
With these conditions, Mantle suddenly becomes one of the layer 2s with extremely strong treasury (about 57% of Arbitrum’s treasury). Meanwhile this treasury will be used to develop for the ecosystem of Layer 2 Mantle.
Standing On Both Big Waves
“The only Modular Layer 2 in the entire forest of Monoliths Layer 2”
As mentioned, Mantle Network is standing on the market’s biggest long-term wave – Layer 2 on Ethereum. Specifically, Mantle belongs to the Optimistic Rollup Layer 2 type, but its architecture is different from all existing Layer 2s.
“Mantle Network is the first among the L2 blockchains currently in testnet to hit mainnet, and the only modular chain among a forest of monoliths.” – Jordi Alexander –
For Monolithic structure, Execution, Settlement, Consensus, and Data Availability tasks are performed by the same blockchain. Ethereum is a typical example of a Monolithic Blockchain, and the current Layer 2 Rollups will take on Ethereum’s Execution task, Ethereum will only be responsible for Settlement, Consensus and DA.
Mantle Network is the only Layer 2 Rollup with a Modular Blockchain structure, with a focus on further reducing work for Ethereum. Mantle will take on the Execution job, while Ethereum still performs Settlement, Consensus, and the DA task will be pushed to the Eigen Layer for processing.
In addition, Mantle does not use ETH but uses native token $MNT to pay for gas. This is extremely important in ensuring the value of the $MNT token, or from another perspective, ensuring the value of Mantle’s treasury (because more than 65% of the treasury’s capital is in the form of $MNT tokens). ). Ensuring treasury is ensuring Mantle’s strengths, because we have not seen anything that Mantle’s ecosystem or technology demonstrates, but the initial strength of this L2 definitely lies in the fact that they are rich.
Is Mantle a stimulant for LSDfi
Talking about a Layer 2, people rarely think of LSD or LSDfi, because these two fields are not naturally related to each other. But Mantle’s vision is to focus on LSD, and even enable LSDfi on their ecosystem, at an early stage when the first pieces of the puzzle like DEX are starting to take shape.
If you go to the project’s website, you can see a product that Mantle is touting as Mantle LSD. This is an unfinished product that is still in the proposal discussion process. Mantle LSD will be similar to LSD protocols such as Lido Finance, Rocket Pool or FraxFinance,… ETH holders can deposit ETH into Mantle LSD to get mntETH (Liquid staking token).
What is worth mentioning here is that in the content of the proposal, it is mentioned that the amount of ETH stored in Mantle treasury will be able to be used for staking into Mantle LSD or other LSD protocols. In other words, the LSD market on Mantle has access to a maximum of ~270,000 ETH coming from Mantle treasury. How big is this number?
Lido Finance is being staked for more than 7,867,505 ETH, ranking top 1 among LSD protocols. Then Rocket Pool with 783,552 (10 times less than Lido) is in the top 2 position. Top 3 is Frax Finance with 242,513 ETH staked into the protocol. So if things go well, the capitalization of Liquid Staking Token on Mantle can be as large as Frax Finance’s LST.
In fact, there was a proposal implemented on June 22, the content was to extract 40,000 ETH from Mantle treasury to lock into Lido Finance, then Lido will deploy 40,000 wstETH on Layer 2 Mantle. Accordingly, 90% of the profits from staking go to Mantle treasury, 5% to Lido and the final 5% to Lido’s partner Nodes. In turn, the liquidity of wstETH on Mantle can attract large DEX (like Uniswap) and large Lending protocols (like Aave) to deploy on Mantle.
This is a deal that is still in the discussion stage. But clearly we see, the story line here is:
- Mantle has 270,000 ETH in treasury.
- Liquid staking derivatives projects are looking to deploy LST to Mantle.
- Mantle diversifies LST across the ecosystem + attracts top tier DeFi protocols to deploy to hst.
Although this is just a theory they are drawing, it is clear that Mantle is having a different development direction compared to the rest of the market. While other ecosystems build piece by piece from DEX, Bridge, Lending, Derivatives,… then deploy grants to attract Top Tier DeFi protocols, Mantle chooses to boost the ecosystem by hitting hard. Largest DeFi Narrative. And of course, Mantle also had to be very rich to go in such a direction.
Not stopping at the LSD story, Mantle recently gave Pendle Finance a Grant package to support Pendle building on Mantle’s ecosystem, this is Mantle’s proactive move to stimulate LSDfi on this ecosystem. In fact, we rarely see a dApp that has not yet been built but has received a grant from the underlying blockchain.
Mantle x Pendle
Meanwhile, Pendle’s position in the LSDfi industry has been proven through their development process, everyone can refer to this article. In addition, I think not only Pendle but many other large LSDfi projects like Lybra may also soon set foot on Mantle Network.
In short, Mantle is proactively creating conditions for LSD and LSDfi to develop on their ecosystem, and Mantle has a large resource to do so. So if it’s early, maybe in the next few months Mantle Network will be a more mentioned name in the LSD and LSDfi market (and open a new category, LSD Chain, for example).
In addition, Mantle will also focus on the Gaming segment, through support from Game7 DAO. However, it is unclear how specifically they will develop this segment.
Summary
Mantle Network has a direction that in my opinion has the opportunity to become a big name when focusing on two keywords: Layer 2 and LSD, however this is still the beginning of the project and the pieces of the puzzle. As basic as DEX, Bridge is not yet complete. Therefore, Mantle Network’s boom time may fall in Q4 of this year onwards.
Hopefully the content of the article has provided you with a useful perspective on Mantle Network and important surrounding issues.
