This article aims to delve into mETH, exploring the current staking (restaking) track and the L2 competitive landscape.
Author: Shenchao TechFlow
Staking (restaking) is an important narrative in this cycle, but unlike the flourishing beginnings of the year, recent on-chain data has shown a slowdown in growth, prompting many to notice that the current staking (restaking) seems to have entered a contradictory and dilemma-filled stage:
On one hand, staking (restaking) aims to release liquidity and facilitate more efficient asset circulation, allowing participation in more yield opportunities;
On the other hand, the increasingly lower barriers to entry for new chains have brought more new chains, and the 'land grab' for liquidity among major chains has intensified, further leading to liquidity fragmentation and user participation restrictions.
In the face of difficulties, how to break the deadlock?
In essence, 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.
Is there a possibility to build an asset that is both usable and practical, that connects various L1s and L2s horizontally, and vertically integrates from native assets, staking to restaking, and even links DeFi and TraFi, truly becoming a hub of universal liquidity?
This is indeed a grand vision that requires strong technical support and rich ecological nourishment. For a long time, the community has been eagerly speculating about which major players in the current ecosystem will emerge as leaders.
With the official launch of cmETH on Bybit on October 23, the community will focus on the Mantle ecosystem: as the native LSD protocol launched by Mantle, mETH has rapidly grown since its launch on December 4, 2023, with a current TVL of 1.28 billion dollars, making it the fourth largest Ethereum LSD product.
The orderly advancement of mETH upgrading to cmETH, the arrival of COOK tokens (mETH and cmETH governance tokens) TGE, and the deep integration with Berachain, Fuel, etc. have further provided the community with concrete examples of this grand vision in the real world.
This article aims to delve into mETH, exploring its specific operational logic, ecological core advantages, and the positive growth expectations brought by the realization of several future milestones, as well as the current staking (restaking) track and L2 competitive landscape.
Image source: Twitter @mETHProtocol
From its inception: the LSD melee, the native yield attribute of mETH achieves exponential growth.
In simple terms, mETH is a permissionless, non-custodial ETH liquid staking protocol that allows users to obtain mETH by staking ETH. As the second core product of the Mantle ecosystem, the protocol was initially named 'Mantle LSP', but during a brand refresh in August 2024, the Mantle ecosystem chose to use mETH as the new brand name to further highlight its focus on asset.
Looking back to the inception of mETH in June 2023, Ethereum had officially transitioned from POW to POS, and Lido Finance had already dominated with a TVL of 13 billion dollars, followed closely by Rocket Pool (rETH) and other competitors. The competition in the LSD track was fierce, and it was clear that mETH, which had just launched its first discussion on the Mantle governance forum, did not have a first-mover advantage.
However, based on extensive community governance communication and technical preparation, on December 4, 2023, the ETH liquid staking protocol (then still called Mantle LSP) was officially launched for all users, unexpectedly cutting a path of growth, emerging as an undeniable 'monster newcomer' in the LSD track at that time:
According to DeFi Llama data, within a week of its official launch, the TVL of Mantle LSP had exceeded 100 million dollars, subsequently soaring to a peak of 2.1 billion dollars in March this year. Currently, the TVL stands at 1.34 billion dollars, making it the fourth largest LSD product on Ethereum. Additionally, according to data disclosed on the official website, mETH has over 8000 wallets on Ethereum and 26,000 wallets on Mantle, demonstrating impressive user base and activity.
Image source: DeFi Llama
The market does not favor homogeneous products for no reason; from the perspective of underlying design, we can easily see the distinctive features of mETH that set it apart from other LSD products.
Let’s first briefly understand the operational logic of mETH:
Users send ETH to the staking contract to obtain mETH, which allows for operations such as initiating staking, canceling staking, and reinvesting.
Oracle contracts and oracles will provide necessary external data for LSP; additionally, the oracle quorum manager will ensure consensus among oracles before data usage.
Node operators are responsible for staking ETH on Ethereum and providing verification services for the network.
mETH has a rich and diverse source of rewards, 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 distributed to mETH holders after deducting service fees.
Image source: https://docs.mantle.xyz/meth
mETH adopts the advanced design of the Ethereum Shanghai upgrade, allowing staking certificates (LST) to be directly redeemable back to ETH after the upgrade, stabilizing the price of LST anchored to ETH further, which can promote mETH to become a high-quality asset similar to ETH. Additionally, this upgrade optimizes smart contract functionality and underlying security, further enhancing mETH's efficiency and security.
As the first L2 ETH with native yield attributes, mETH’s inherent yield-generating asset property is the key to its standout performance in the LSD competition: through a value accumulation design of permissionless ERC-20 receipt tokens, mETH can automatically accumulate yield within the mETH tokens themselves. This intrinsic yield-generating asset property not only grants mETH higher capital efficiency and holding yields but also allows it to be easily adopted by applications and integrate more deeply into richer and broader ecological scenarios.
Security is the fundamental principle on which DeFi protocols stand; thus, mETH must be built on a robust security foundation. The strong security foundation of mETH comes from its permissionless and non-custodial nature, ensuring that users maintain control of their assets throughout the entire process, with strict management achieved via smart contracts. The staked ETH is retained within the smart contract address defined by the protocol, and the core smart contracts enforce reasonable boundaries and risk limitations.
On the other hand, the source comes from the meticulous design of the security modules: 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 canceling the pause of 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 mETH's rapid growth. Delving into the remarkable performance behind mETH, the powerful empowerment brought by its horizontal and vertical ecological expansion is the main driver behind its significant growth.
Ecological empowerment: How will mETH expand to become a 'universal liquidity hub'?
Upon visiting the official mETH website, visitors are easily drawn in by a 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 the way for its developmental path to some extent.
After all, whether it is the most widely adopted or the most capital-efficient, it all needs to be built on a rich ecosystem.
As the second core product of the Mantle ecosystem, mETH has a natural advantage in deep integration with the Mantle ecosystem, particularly in the DeFi sector.
According to L2 beat data, Mantle currently has a TVL of 1.45 billion dollars, ranking among the top four L2 projects. Its ecological landscape has matured over time, with DeFi serving as a cornerstone of the ecosystem, as evidenced by DeFi Llama: the top three TVL projects in the Mantle ecosystem, Agni Finance, INIT Capital, and Merchant Moe, are all DeFi projects.
Through deep integration with the Mantle DeFi ecosystem, mETH plays an important role as a liquidity hub: by exploring the mETH official website's ecological page, we can see that mETH has established partnerships with 38 projects covering Restaking, lending, DEX, MEME, and more, including well-known restaking protocols like Eigenlayer, Symbiotic, Karak, and others, as well as Zircuit, INIT Capital, Pendle, and other prominent projects.
It’s 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 yield opportunities but also creates a stronger demand for mETH. This healthy cycle of development further promotes 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, with a value exceeding 5 billion dollars at its peak, Mantle Treasury considers mETH an important capital reserve:
Image source: https://www.mantle.xyz/
The strategic support of Mantle Treasury for mETH not only optimizes reward distribution, ensuring mETH holders receive more substantial yields, but also enhances the liquidity of the protocol, 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, the layout of mETH in the CeFi sector is also worth mentioning:
mETH has achieved deep cooperation with Bybit, allowing users to directly stake ETH to mETH on Bybit, and holding mETH on Bybit can also earn on-chain points, while supporting mETH as trading margin.
As a leading centralized exchange, Bybit's support for mETH not only gives mETH a regulatory edge, but also brings a more imaginative CeFi narrative: Bybit's massive user base and rich project resources further propel mETH towards realizing its vision of 'widespread adoption', bringing in more incremental users and collaboration possibilities.
Image source: Bybit Announcement
Certainly, relying on its native yield attributes, outside of the Mantle ecosystem, mETH can also easily integrate with a broader range of on-chain and off-chain applications:
In the future, mETH plans to collaborate with more emerging L1/L2s, including Avail, Fuel, Berachain, and become their initial LP asset, continuously deepening the on-chain demand for mETH. By focusing on assets to drive mETH to become a universally applicable 'general asset' across the entire chain, mETH further aims to become a general 'universal liquidity hub', providing users with more efficient capital management and asset allocation solutions.
It's worth mentioning that the rise of the RWA sector within the Mantle ecosystem also expands the applicability of mETH into TraFi:
Previously, Mantle and Ondo Finance established a deep partnership, with USDY widely adopted in the Mantle ecosystem (including Agni Finance, FusionX Finance, etc.), providing mETH with further opportunities to integrate with RWA assets, which can drive mETH to break the barriers between crypto assets and traditional finance, fostering more innovative financial products and services.
Thus, mETH's horizontal ecological expansion from Mantle to the entire 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 next stop ➡️ cmETH
For both mETH and the community, the biggest project milestone in the fourth quarter of 2024 will be the COOK token TGE event launching simultaneously on October 23.
Image source: Twitter @mETHProtocol
In June 2024, with the approval of the MIP-30 governance proposal, cmETH will become the new liquid restaking token (LRT), marking mETH's official transition from LSD to LSD + LRT upgrade.
Specifically: mETH serves as a liquid staking token, allowing users to stake ETH to obtain mETH; cmETH serves as a liquid restaking token, allowing users to stake mETH to obtain cmETH.
Like mETH, cmETH will also be highly composable within the Mantle ecosystem (including EigenLayer, Symbiotic, Karak, Zircuit, etc.), allowing users to maintain the advantages of mETH while exploring more yield opportunities through L2 and decentralized applications and protocols.
The upgrade to cmETH introduces users to restaking mechanics while adding more yield opportunities to mETH's already diverse yield structure. Currently, participating in cmETH can yield sixfold rewards:
ETH staking yield
Restaking protocol yield (with diverse restaking options including Eigenlayer, Symbiotic, Karak, etc.)
AVS yield
COOK token yield
Other partner yields
dApp and protocol integration
Image source: Twitter @mETHProtocol
The COOK token has been introduced as the new governance token for Mantle LSP, with a total supply of 5 billion, allowing holders to participate in ecological governance through voting and other means, according to official documents.
It is noteworthy that according to the distribution rules, 10% of COOK tokens are allocated to the core contributor team, locked for one year and released linearly over three years; 30% will go to the Mantle Treasury; 10% will be allocated for private placements; and the remaining 50% will be distributed entirely to the mETH protocol community.
The reason why COOK token TGE is regarded as a carnival for the project and the community is largely due to COOK token's generous performance in incentivizing the community.
Previously, to further stimulate community participation and call for broader involvement, mETH launched a comprehensive community incentive activity.
The most grandiose event has to be the first phase of the Methamorphosis activity:
In this 100-day activity, 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 and complete tasks to earn Power rewards, which can later be exchanged for COOK tokens. This means that the higher the accumulated Powder, the more COOK they will receive in the future.
Different projects offer different Power rewards; each mETH/cmETH LP can earn a maximum of 40 Powder rewards. Additionally, in conjunction with the first phase of the Methamorphosis activity, mETH also launched a referral program, allowing users to earn additional Power rewards for successfully referring friends.
5% of the total supply of COOK tokens, equivalent to 250 million tokens, will be used to incentivize users participating in the first season of the Methamorphosis activity.
Image source: Mantle Medium
The Mantle Rewards Station takes more into account the MNT holders: users can earn COOK token rewards by locking MNT tokens, with fixed-term locking yielding higher rewards. 4% of the total supply of COOK tokens, equivalent to 200 million tokens, will be used to incentivize participating users.
Users can also earn COOK rewards by participating in the leading MEME project Puff within the Mantle ecosystem and Puff NFT. 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 and locking.
If users choose to burn PUFF to exchange for COOK tokens, they can share 4.5% of the total supply, which is 225 million $COOK tokens, all unlocked on the day of TGE; if users choose to lock PUFF for 6 months, they can receive a free mETH loan and obtain 22.5 million COOK tokens; if users neither burn nor lock, they can still share 2.5 million COOK tokens.
Additionally, through cooperative activities with Bybit, Binance, Stash, and others, more users have become aware of the event information and actively participated. From July 1, 2024, to October 9, during this intense 100 days, mETH drove remarkable on-chain growth for the Mantle ecosystem:
The cumulative active on-chain users of Mantle Network have increased by 67%, totaling over 4.39 million;
The net growth of MNT locked in the Mantle Rewards Station has increased by 125%, totaling over 148 million;
The TVL of mETH on the Ethereum network and Mantle Network has increased by 12.5%, reaching 1.21 billion dollars;
The number of participating users has increased by 2154%, from an initial 1600 to over 3700 by the end of the activity...
Although the first phase of the Methamorphosis activity has ended, more community members are already looking forward to the arrival of the second phase.
Image source: Mantle Medium
Conclusion
In the crypto world, TGE launch strategies significantly impact a project's future direction; through strong on-chain growth, we can easily perceive the community and user enthusiasm 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? We can find the answer from specific business aspects: relying on advanced underlying design and strong ecological empowerment, mETH has quickly grown into the fourth largest Ethereum LSD product.
In this cycle characterized by more pronounced liquidity diversion, mETH horizontally aggregates liquidity from L1, L2, and even traditional world DeFi, CeFi, and TraFi, further propelling itself to become the most widely adopted and capital-efficient universal asset across the chain, thus realizing its vision of becoming a 'universal liquidity hub' and providing it with more imaginative future growth potential.
With mETH transitioning from LSD to LSD + LRT vertical narrative upgrades, will cmETH, with the same foundations, quickly capture a significant market share in the Restaking sector worth hundreds of billions?
If we simply look to the past, with the completion of cmETH upgrades, the launch of COOK, and the realization of multiple ecological milestones, the community has high hopes for mETH/cmETH to embark on the next stage of rapid growth.
