Over 480,000 ETH has been staked, what makes mETH special?

Author: 1912212.eth, Foresight News

Three years ago, Dragonfly partner Haseeb Qureshi expressed his anticipation for Rollup while also worrying that it might be born at the wrong time, with no one cheering for it. At that time, chains like Polygon and BNB Chain were thriving and receiving widespread attention. However, the leading L2 mainnets at that time had not yet launched. Who would have thought that just two years later, L2s are now flourishing, with a multitude of projects competing for attention.

If the number of emerging public chains is limited, the variety of L2s today could probably be counted on several hands. However, while the cost of building new L2s has become relatively low, those that truly gain market attention and recognition are still relatively few.

In terms of technology, the differentiation between OP and ZK remains, but the real gap is still in the state of ecosystem development, user experience, and liquidity incentives.

Currently, aside from the leading L2s, the TVL gap among other L2s is not too significant. The differences in finer details also seem somewhat tedious, leading to various issues.

One issue is the fragmentation of liquidity. L2s have been criticized for becoming increasingly fragmented as their numbers grow, making it time-consuming and laborious to transfer assets to other L2 chains, which negatively impacts user experience. This is one of the key reasons why some market funds favor and pursue high-performance public chains.

Another issue is the general decline of the wealth effect. Among many L2s, there has not been a meme trend; instead, the meme wave has appeared on the high-performance public chain Solana. Even though some applications have developed ecosystems using L2 technology, they still do not match the attraction brought by the wealth effect. Coupled with the poor performance of their token prices, the appeal of L2s to some ordinary players has gradually weakened.

How to solve the problem of fragmented liquidity and how to find ways to expand revenue channels for players' assets has become a breakthrough path for some L2s.

Introduction to mETH Protocol

mETH is a permissionless, non-custodial ETH liquid staking protocol on Ethereum. At the end of 2023, Mantle aimed at the opportunity of liquid staking and launched Mantle LSP. In August of this year, its brand name was upgraded from Mantle LSP to mETH Protocol. mETH stands for Mantle staked ether, which is more concise and aligns better with the brand image.

For every ETH staked, users receive an mETH staking certificate. After unstaking, they can obtain the originally staked ETH along with staking rewards.

Although the liquid staking giant Lido has long dominated the ETH staking market, the rankings of subsequent protocols have changed quite frequently, indicating fierce competition. Data shows that the amount of ETH staked on mETH has exceeded 480,000, with TVL rising to $1.189 billion.

mETH is more than twice the amount of staked ETH on Coinbase. Considering that the second place is held by Binance and the third by the veteran staking protocol pioneer, mETH's achievements are quite impressive.

In its official documentation, mETH is described as aiming to become the most widely adopted and capital-efficient ETH staking token. Currently, various brand collaborations and integrations are indeed playing a crucial role in continuously expanding mETH's boundaries and encroaching on competitors' market shares.

In terms of risk management, mETH's core smart contracts and off-chain services are non-custodial, thus minimizing risks. Additionally, it adopts designs after the Ethereum Shanghai upgrade, emphasizing the integrity of ETH, ensuring that mETH on L1 does not add complexity with other POS tokens and chains. This also opens the door for various integrations in the future.

In the rapidly changing market, the re-staking track represented by Eigenlayer has once again sparked an arms race for liquid staking protocols. In no time, re-staking protocols like Swell, Renzo, and eth.fi have emerged, stirring up the situation.

Under the trend, mETH's entry into the re-staking track is a natural progression.

Re-staking cmETH

Re-staking allows staked assets in PoS chains to be reused to secure other Ethereum-based protocols. This enables DApps to leverage Ethereum's PoS security without creating their own staking mechanisms, thereby enhancing the utility of staked ETH beyond its primary network security functions.

The mETH protocol allows users to benefit from the capital efficiency, convenience, and wide use cases on Mantle. However, staking in DeFi locks up assets, reducing some efficiency. Re-staking helps maximize capital efficiency. Following mETH, the re-staking protocol cmETH has also emerged.

Users' LSTs are deposited into the re-staking protocol, with security provided by oracles, cross-chain bridges, and DA layers. Some staking rewards and income will also flow back into cmETH.

Advantages of Liquid Assets

The crypto market emphasizes capital efficiency. Aside from the 3.43% annual yield that can be obtained from staking ETH itself, the staking receipt token mETH also has native yield functionality. Do not underestimate native yield; when the asset itself has yield attributes, users transferring their ETH to its L2 can automatically enjoy interest, greatly awakening funds sensitive to yield.

In addition, re-staking cmETH is also expanding vigorously, continuously collaborating with other re-staking protocols like EigenLayer, Symbiotic, and Karak. cmETH not only earns points but also enjoys certain yields.

cmETH has achieved good composability within the Mantle ecosystem. Its holders can also enjoy rewards from ETH proof-of-stake validation (provided by the underlying mETH), AVS active validation service rewards, token COOK rewards, and income from integrations with other L2 DApps. The on-chain advantages are quite evident.

The level of protocol integration is not only tested on-chain; off-chain integration, especially cooperation with exchanges, is crucial. After all, on-chain players do not make up the majority, and many players choose to keep their funds on exchanges due to liquidity and convenience.

Bybit has chosen to open a staking entry for mETH and list mETH. According to CCData reports, as of the end of September, Bybit's spot market share has risen to third globally, while CryptoRank data shows that in the exchange app category, Bybit ranks second globally with 4.5 million downloads, second only to Binance. The traffic boost from large exchanges brings significant exposure to mETH.

It is worth mentioning that mETH can also be used as collateral on Bybit. As we know, the core function of collateral is to optimize stability in risk control, market liquidity, and credit assurance. For large funds and trading teams, when assets are listed as collateral on exchanges, it greatly expands the use cases of mETH, making hesitant trading teams more willing to deposit funds in mETH. Conversely, as funds continue to flow in, the liquidity of mETH becomes increasingly high, forming a virtuous cycle.

Market hotspots and trends often change rapidly; project teams and protocols must keep up with the heat to continuously amplify their influence. Where will the future hotspots be? The direction of the market may already be indicated. In the future, mETH will also collaborate with the highly anticipated Berachain and Fuel to strengthen liquidity integration.

COOK Token Economics

COOK is the new governance token for mETH. It is currently mainly used for voting on the direction of the ecosystem and other strategic matters. The total supply is 5 billion, with 15.1028% allocated to qualified users in the first season of ecosystem activities.

Among this portion, 5% of the tokens are allocated to mETH, 4% to Mantle reward stations, 5% to the Puff protocol, 1% to Puff NFT holders, and the remaining small portion allocated to certain joint activity rewards.

It is worth noting that, at a time when VC tokens are under constant scrutiny, few project teams are willing to make changes in token distribution. Retail investors have become increasingly dissatisfied with the large share of tokens held by VCs, leading to endless selling pressure and being trapped. Fairness, or rather fairness. Allowing community members to participate in the wealth wave and gain profits is the right answer and will increasingly attract attention.

Looking at the total token distribution of COOK, the shares for the core team and private fundraising each account for only 10%, while the total allocated to the community and protocol treasury reaches 60%, truly aligning with market demands and incorporating fairness from the very beginning of the token distribution design.

In comparison to the re-staking leader Eigenlayer, which currently has a market cap of around $600 million and an FDV reaching a high of $5.6 billion, mETH's current TVL is nearly $1.3 billion, while Eigenlayer's is $11.15 billion, making the latter over 8 times larger than the former. If calculated solely based on the TVL ratio, the estimated FDV for COOK upon launch could be around $700 million.

COOK is expected to launch this month, with specific details subject to change.

During the mETHamorphosis event from July 1 to early October this year, its data performance has been quite impressive. mETH holders can accumulate points on Mantle by staking, interacting with ecosystem protocols, and adding liquidity, with points ultimately redeemable for COOK.

With the official end of the first quarter, activities for the second quarter will soon be announced.

Conclusion

After months of FUD, market funds are now warming up. Many re-staking protocols have seen a decline in popularity after launching their tokens, compounded by a sluggish market. With the Federal Reserve's interest rate cuts, DeFi will attract more yield funds and inject more liquidity. The performance of the re-staking track and COOK will be worth watching.