Author: ShenChao TechFlow
Staking (re-staking) is an important narrative in this cycle, but unlike the flourishing situation at the beginning of the year, the recent slowdown in on-chain data growth has made more people begin to notice that the current staking (re-staking) seems to have entered a contradictory and dilemma stage.
On one hand, staking (re-staking) aims to release liquidity and promote more efficient circulation of assets, allowing participation in more earning opportunities;
On the other hand, the increasingly lower barriers to launching chains have brought more new chains, and the 'land grabbing' around liquidity among various chains has intensified, which has instead led to liquidity fragmentation and restrictions on user participation.
In the face of difficulties, how to break the deadlock?
Tracing back to the root, assets are the ultimate destination of liquidity. Therefore, compared to enhancing interoperability and other problem-solving ideas, focusing on assets seems to be more intuitive and efficient.
So is there a possibility of building an asset that combines usability, practicality, and universality, not only horizontally bridging major L1 and L2 but also vertically integrating from native assets, staking to re-staking, and even connecting DeFi and TraFi, truly becoming a universal liquidity hub?
This is indeed a grand vision that requires strong technical support and cannot be separated from rich ecological nourishment. For a long time, the community has been eager to guess which of the several leading projects in the current ecosystem will stand out.
With cmETH officially launching on Bybit on October 23, the community's focus will be on the Mantle ecosystem: as the native LSD protocol launched by Mantle, mETH has achieved rapid growth since its launch on December 4, 2023, with a current TVL of $1.28 billion, making it the fourth largest Ethereum LSD product.
The orderly advancement of mETH's upgrade to cmETH, the arrival of the COOK token (governance tokens for mETH and cmETH) TGE, and the deep integration with projects like Berachain and Fuel further enable the community to have a concrete object for this grand vision in the real world.
This article aims to delve into mETH by exploring its specific operational logic, core ecological advantages, and the positive growth expectations brought by the realization of multiple future milestones, providing insights into the current staking (re-staking) track and the competitive landscape of L2.
Image source: Twitter @mETHProtocol
At the beginning of its birth: in the chaotic LSD competition, the inherent yield properties of mETH achieved exponential growth.
In simple terms, mETH is a permissionless, non-custodial ETH liquidity staking protocol, allowing users to obtain mETH by staking ETH. As the second core product of the Mantle ecosystem, the protocol's original name was 'Mantle LSP', but in the brand refresh in August 2024, the Mantle ecosystem chose to use mETH as the new brand name to further highlight its focus on the asset side.
Looking back to the birth of mETH in June 2023, Ethereum officially transitioned from POW to POS, and Lido Finance had already seized the dominant position with a TVL of $13 billion, followed closely by Rocket Pool (rETH) and others. The competition in the LSD track was fierce, which clearly did not give mETH, newly discussed in the Mantle governance forum, a first-mover advantage.
However, on the basis of sufficient community governance communication and technical preparation, on December 4, 2023, the ETH liquidity staking protocol (then still called Mantle LSP) was officially launched to all users, and it successfully carved out a growth path, emerging as a 'monster newcomer' in the LSD track at that time:
According to DeFi Llama data, the TVL of Mantle LSP surpassed $100 million within just one week of its official launch, and thereafter it soared, reaching a peak TVL of $2.1 billion in March this year. Currently, the TVL is $1.34 billion, making it the fourth largest LSD product on Ethereum. Additionally, according to data released on the official website, mETH has over 8000 wallets on Ethereum and 26,000 wallets on Mantle, showcasing impressive user volume and activity.
Image source: DeFi Llama
The market does not favor homogenized products without reason. From the perspective of underlying design, we can easily see the unique features of mETH that differentiate it from other LSD products.
Let's first briefly understand the operational logic of mETH:
Users can send ETH to the staking contract to receive mETH. The staking contract allows for operations such as initiating staking, canceling staking, and reinvesting compound interest.
Oracle contracts and oracles will provide necessary external data for LSP. In addition, the Oracle Quorum Manager will ensure consensus among oracles before using the data.
Node operators are responsible for staking ETH on Ethereum and providing verification services for the network.
mETH has a rich and diverse array of reward sources, including issuance rewards, staking rewards, MEV, and priority fees. All rewards will be aggregated through the Consensus Layer Receiver and Execution Layer Receiver into the Returns Aggregator, and after deducting service fees, distributed to mETH holders.
Image source: https://docs.mantle.xyz/meth
mETH adopts the advanced design of the Ethereum Shanghai upgrade. After the upgrade, the staking certificate LST can be directly redeemed back to ETH. The price of LST pegged to ETH will be more stable, further promoting mETH to become a quality asset similar to ETH. Coupled with optimizations in smart contract functionality and underlying security during this upgrade, mETH's efficiency and security have also been further enhanced.
As the first L2 ETH with inherent yield properties, mETH's natural income-generating asset attribute is the key to its standout performance in the LSD competition: through a permissionless ERC-20 receipt token design for value accumulation, mETH can automatically achieve income accumulation within the mETH token itself. This inherent income-generating asset property not only provides mETH with higher capital efficiency and holding returns but also allows it to be easily adopted by applications and integrated more deeply into richer and broader ecological scenarios.
Security is fundamental for the survival of DeFi protocols. Therefore, mETH must be built on a strong security foundation. On one hand, mETH's strong security foundation stems from its permissionless and non-custodial nature, ensuring that users maintain control over their assets throughout the entire process and that the staked ETH remains in a smart contract address defined by the protocol, with the core smart contract enforcing reasonable boundaries and risk limits.
On the other hand, it comes from a meticulous security module design: the Pauser can pause the protocol in case of anomalies; the Guardian can pause the contract for preventive purposes; the Mantle Security Role is responsible for resuming the contract after any issues are resolved. These three security roles complement each other to maintain protocol security.
The advantages in the series of underlying designs are a necessary prerequisite and technical foundation for the rapid growth of mETH. Delving deeper into this impressive performance, the strong empowerment brought by the horizontal and vertical ecological expansion of mETH is the main driver behind its robust growth.
Ecological empowerment: How did mETH expand to become a 'universal liquidity hub'?
Opening the mETH official website, visitors can easily be attracted by a single statement:
mETH aims to become the most widely adopted and capital-efficient ETH staking token.
mETH aims to become the most widely adopted and capital-efficient ETH staking token.
This is a high-level summary of mETH's vision, which also points out the direction for its development path to some extent.
After all, whether it is the most widely adopted or the most efficient capital, both require a rich ecosystem to be realized.
As the second core product of the Mantle ecosystem, mETH has a natural advantage in deeply integrating with the Mantle ecosystem, especially in the DeFi sector.
According to data from L2 beat, Mantle currently has a TVL of $1.45 billion, ranking among the top four L2 projects. Its ecological landscape, having matured over time, has taken shape, with DeFi serving as a cornerstone of the ecosystem, as can be more intuitively shown in DeFi Llama: the top three TVL projects in the Mantle ecosystem, Agni Finance, INIT Capital, and Merchant Moe, are all DeFi projects.
By deeply integrating with the Mantle DeFi ecosystem, mETH plays an important role as a liquidity hub within the Mantle ecosystem: by exploring the mETH official website's ecological page, we can see that mETH has currently established partnerships with 38 projects, covering areas such as Restaking, lending, DEX, and MEME, including well-known re-staking protocols like Eigenlayer, Symbiotic, and Karak, as well as notable projects like Zircuit, INIT Capital, and Pendle.
It is worth mentioning that at the beginning of October, Mantle successfully distributed the first and second phases of EIGEN rewards to eligible mETH holders, totaling 2,098,636.67 tokens.
Mantle's rich and mature ecological landscape not only provides mETH with more liquidity scenarios and richer earning opportunities but also creates stronger demand for mETH. This healthy cycle of positive development further drives the continuous growth and prosperity of mETH.
Image source: https://meth.mantle.xyz/explore
Another core competitive advantage that cannot be ignored comes from the strong support of the Mantle treasury:
As the largest project treasury in the crypto industry during its peak, with a value exceeding $5 billion, Mantle Treasury regards mETH as an important reserve of funds:
Image source: https://www.mantle.xyz/
Mantle Treasury's strategic support for mETH not only optimizes reward distribution, further enabling mETH holders to obtain more considerable returns but also strengthens the protocol's liquidity, providing holders with a better trading experience.
In the future, as Mantle Treasury continues to fulfill its commitment to support the sustainable development of mETH, mETH will maintain its attractiveness in future market competition.
After discussing the DeFi sector, mETH's layout in the CeFi sector is also noteworthy:
mETH has established deep cooperation with Bybit, allowing users to directly stake ETH on Bybit for mETH, and holding mETH on Bybit also allows them to earn on-chain points while supporting mETH as trading collateral.
As a leading centralized exchange, Bybit's support for mETH not only places mETH ahead in compliance but also brings a more imaginative CeFi narrative to mETH: Bybit's vast user base and rich project resources further propel mETH to achieve its vision of being 'the most widely adopted', bringing more incremental users and richer collaboration possibilities to mETH.
Image source: Bybit Announcement
Of course, relying on its inherent yield-generating properties, mETH can more easily connect with a broader range of on-chain and off-chain application scenarios beyond the Mantle ecosystem:
In the future, mETH plans to collaborate with more emerging L1/L2 projects including Avail, Fuel, and Berachain, becoming their initial LP asset to continuously deepen the on-chain scenario demand for mETH. By leveraging assets to drive mETH to become a universally applicable 'universal asset', it aims to achieve the aggregation of fragmented liquidity and further become a universal 'liquidity hub', providing users with more efficient fund management and asset allocation solutions.
It is worth mentioning that the rise of the RWA sector within the Mantle ecosystem has further broadened the applicability of mETH into TraFi:
Previously, Mantle and Ondo Finance established deep cooperation, and USDY has been widely adopted in the Mantle ecosystem (including Agni Finance, FusionX Finance, etc.), providing mETH with opportunities for further combinations with RWA assets, which can promote the integration of mETH with a broader range of TradFi institutions and funds. This trend will help mETH break the barriers between crypto assets and traditional finance, fostering the birth of more innovative financial products and services.
Thus, the horizontal ecological expansion from Mantle to cross-chain, from DeFi to CeFi, and from crypto-native to traditional finance has gradually taken shape. With the arrival of cmETH, the vertical integration of mETH from Staking to Restaking is also slowly unfolding.
Second growth curve: mETH's next stop ➡️ cmETH
For both mETH and the community, the biggest project milestone in the fourth quarter of 2024 is undoubtedly the COOK token TGE event that began on October 23.
Image source: Twitter @mETHProtocol
In June 2024, with the approval of the MIP-30 governance proposal, cmETH will become the new liquidity re-staking token (LRT), marking mETH's official upgrade from LSD to LSD + LRT.
Specifically: mETH, as a liquidity staking token, allows users to stake ETH to obtain mETH; cmETH, as a liquidity re-staking token, allows users to stake mETH to obtain cmETH.
Like mETH, cmETH will be highly composable within the Mantle ecosystem (including EigenLayer, Symbiotic, Karak, Zircuit, etc.), allowing users to explore more earning opportunities while maintaining the advantages of mETH through L2 and decentralized applications and protocols.
The cmETH upgrade introduces a re-staking mechanism for users, while adding more earning opportunities to the already diverse income composition of mETH. Currently, participating in cmETH can yield six-fold rewards:
ETH staking rewards
Re-staking protocol rewards (including a diverse range of re-staking options such as Eigenlayer, Symbiotic, Karak, etc.)
AVS rewards
COOK token rewards
Other partner rewards
dApp and protocol integration
Image source: Twitter @mETHProtocol
The COOK token has been introduced as the new governance token for Mantle LSP. According to official documentation, the total supply of this token is 5 billion, and holders will be able to participate in ecological governance through voting and other methods.
It is noteworthy that according to the distribution rules, 10% of the COOK token will be obtained by core contributors, with a lock-up period of 1 year and a linear release over 3 years; 30% will be allocated to the Mantle Treasury; 10% will be allocated to private placements; and the remaining 50%, a significant portion, will be entirely distributed to the mETH protocol community.
The reason why the COOK token TGE is a carnival for both the project and the community is largely due to COOK's generous performance in incentivizing the community.
Previously, to further stimulate community participation and call for larger-scale involvement, mETH launched a comprehensive community incentive activity.
The most spectacular is undoubtedly the first phase of the Methamorphosis event:
During this 100-day event, mETH once again leveraged its ecological advantages, directly announcing 23 partners, including EigenLayer, Symbiotic, Karak, Zircuit, Pendle, and other well-known projects. Users holding mETH can participate in interactions to complete tasks and earn Power rewards, which can be exchanged for COOK tokens in the future, meaning that the higher the accumulated Powder, the more COOK they will receive in the future.
Different projects offer different Power rewards, with each mETH / cmETH LP being eligible for a maximum of 40 Powder rewards. Additionally, in conjunction with the first phase of the Methamorphosis activity, mETH has also launched a referral program, where successfully recommending friends can earn extra Power rewards.
5% of the total supply of COOK tokens, amounting to 250 million tokens, will be used to incentivize users participating in the first season of the Methamorphosis event.
Image source: Mantle Medium
Mantle Rewards Station takes into consideration MNT holders: users can earn COOK token rewards by locking MNT tokens. Choosing a fixed-term lock can yield higher multiples of rewards. 4% of the total supply of COOK tokens, amounting to 200 million tokens, will be used to incentivize participating users.
Users can also participate in the leading MEME project Puff and Puff NFT within the Mantle ecosystem to earn COOK rewards. 5% and 1% of the total supply of COOK tokens will be used to incentivize participating users. Previously, Puff announced that its holders could obtain COOK tokens through burning, locking, and other methods.
If users choose to burn PUFF for COOK tokens, they can share 4.5% of the total supply, which amounts to 225 million $COOK tokens, and all will be unlocked on the TGE day. If users choose to lock PUFF for 6 months, they will receive a free mETH loan and 22.5 million COOK tokens; if users neither burn nor lock, they can still share 2.5 million COOK tokens.
In addition, through collaborations with Bybit, Binance, Stash, and other activities, more users have become aware of the event information and eagerly participated. From July 1 to October 9, 2024, during this fiery 100 days, mETH drove impressive on-chain growth for the Mantle ecosystem:
The number of active on-chain users in the Mantle Network has increased by 67%, totaling over 4.39 million;
The net growth of MNT locked at Mantle Rewards Station has reached 125%, totaling over 148 million;
The mETH TVL on the Ethereum network and the Mantle Network has increased by 12.5%, reaching $1.21 billion;
The number of participating users has increased by 2154%, from an initial 1600 to over 3700 by the end of the event...
Although the first phase of the Methamorphosis event has concluded, more community members are already looking forward to the arrival of the second phase.
Image source: Mantle Medium
Conclusion
In the crypto world, the TGE launch strategy's impact on the project's future direction is self-evident. Through strong on-chain growth, we can easily discern the widespread enthusiasm of the community and users for mETH / cmETH, laying a solid foundation for the future development of cmETH and COOK.
Of course, having seen many cases where 'TGE is the final madness of a project', how can mETH / cmETH stand out? This can be answered through specific business cases: relying on advanced underlying design and strong ecological empowerment, mETH has rapidly grown into the fourth largest Ethereum LSD product within a short time.
In this current cycle, characterized by significant liquidity diversion, mETH horizontally aggregates liquidity from L1, L2, and even traditional DeFi, CeFi, and TraFi, pushing itself to become the most widely adopted and capital-efficient cross-chain universal asset. This further fulfills its vision of becoming a 'universal liquidity hub' and brings it a more imaginative growth space.
With mETH starting the vertical narrative upgrade from LSD to LSD + LRT, can cmETH, which has the same foundation, quickly capture a significant share of the Restaking market worth billions?
If it were as simple as carving a boat to seek a sword, with the completion of the cmETH upgrade, the launch of COOK, and the realization of multiple milestones in the ecosystem, the community has high expectations for whether mETH / cmETH can open up the next stage of rapid growth.
