Author: 1912212.eth, Foresight News
3 years ago, Dragonfly partner Haseeb Qureshi once lamented "I'm really looking forward to Rollup, but I'm also worried that it will be out of time and no one will applaud it." At that time, chains like Polygon and BNB Chain were at their peak and received widespread attention. But at that time, the L2 mainnets that are now at the forefront had not yet been launched. Who would have thought that in just 2 years, L2s would now be blooming, with a multitude of them competing.
If you can count the number of emerging public chains on your fingers, then the number of various L2s now would be too many to count on your hands.
Although the technical aspect of the track is still differentiated between OP and ZK, what really widens the gap is the state of ecosystem development, user experience, and liquidity incentive measures.
Currently, apart from the leading L2s, the difference in TVL among other L2s is not too large. The differentiation in the details is also somewhat bland, which has also led to many problems.
One of them is the fragmentation of liquidity. L2s are often criticized for the increasing dispersion of assets circulating on the second layer as their number increases, and it is time-consuming and laborious to transfer them to other L2 chains, affecting the user experience. This is also one of the important reasons why some market funds favor and pursue high-performance public chains.
The second is the generally weak wealth effect. Among the many L2s, there has been no meme trend, but the meme wave has appeared on the high-performance public chain Solana. Even if some applications develop their ecosystems by leveraging L2 technical infrastructure, they are still not as attractive as the wealth effect, and their token price performance is also weak, making L2 less attractive to some ordinary players.
How to solve the problem of fragmented liquidity, and how to find ways to expand the income channels for players' assets, has become the breakthrough for some L2s.
Introduction to mETH Protocol
mETH is a permissionless, non-custodial ETH liquidity staking protocol on Ethereum. At the end of 2023, Mantle spotted the opportunity for liquidity staking and launched Mantle LSP. In August this year, its brand name was upgraded from Mantle LSP to mETH Protocol. mETH is the English abbreviation for Mantle staked ether, which is more concise and clearer, and more in line with the brand image.
Users receive mETH staking certificates for each ETH they stake. After unstaking, they can receive the original staked ETH and staking rewards.
Although the liquid staking giant Lido has long occupied the majority of the ETH staking market, the rankings of subsequent protocols have been changing quite frequently, with fierce competition. Data shows that currently, over 480,000 ETH are staked on mETH, with a TVL of $1.189 billion.
mETH's staked ETH on Coinbase is more than double that. Considering that the second place is the Cosmos-based Binance, and the third place is the veteran staking protocol Lido, mETH's achievements are quite impressive.
In its official documentation, mETH is described as being built to become the most widely adopted and capital-efficient ETH staking token. Currently, various brand collaborations and integrations are constantly expanding the boundaries of mETH and eroding the market share of competitors.
In terms of risk control, mETH's core smart contracts and off-chain services are non-custodial, so its risks are minimized. It also adopts the design after the Ethereum Shanghai upgrade, paying attention to the integrity of ETH, and the mETH on L1 will not increase the complexity of other PoS tokens and chains. This also opens the door to various integrations in the future.
In the changing market, the re-staking track represented by Eigenlayer has once again triggered an arms race for liquid staking protocols. Protocols like Swell, Renzo, and eth.fi, representing re-staking, have emerged and stirred up the situation.
Naturally, mETH has entered the re-staking track.
Re-staking cmETH
Re-staking allows the staked assets in the PoS chain to be reused to protect other Ethereum-based protocols. This allows DApps to leverage Ethereum's PoS security without creating their own staking mechanism, enhancing the utility of staked ETH beyond its primary network security function.
The mETH protocol allows users to benefit from the capital efficiency, convenience, and wide use cases of Mantle. However, when staking in DeFi, it will be locked, reducing some efficiency. Re-staking can help maximize capital efficiency. After mETH, the re-staking protocol cmETH was born.
Users' LST deposited in the re-staking protocol is secured by oracles, cross-chain bridges, and the DA layer. A portion of the staking rewards and income will also flow back to cmETH.
Advantages of Liquid Assets
The crypto market emphasizes capital efficiency. Apart from the 3.43% annualized yield from staking ETH itself, the native token mETH also has its own yield-generating function. Don't underestimate the native yield, when the asset itself has yield attributes, users can automatically enjoy the interest when they cross-chain their ETH to the L2, greatly awakening the capital sensitive to yield.
In addition, the re-staking cmETH is also rapidly expanding, constantly collaborating with other re-staking protocols such as EigenLayer, Symbiotic, and Karak. cmETH can not only earn points, but also enjoy certain yields.
cmETH has achieved good composability in the Mantle ecosystem. Its holders can also enjoy the benefits of ETH proof-of-stake validation (provided by the underlying mETH), AVS active validation service rewards, COOK token rewards, and integration with other L2 DApps. The on-chain advantages are quite obvious.
What tests the level of protocol integration is not only on-chain, but off-chain integration, especially cooperation with exchanges, is crucial. After all, on-chain players do not make up the vast majority, and there are quite a few players who choose to keep their funds on exchanges due to factors such as liquidity and convenience.
Bybit has chosen to open a staking entry for mETH and list mETH. According to CCData report data, as of the end of September, Bybit's spot market share has risen to the third globally, and CryptoRank data also shows that in the exchange app category, Bybit ranks second globally with 4.5 million downloads, second only to Binance. The flow boost from the major exchange has brought a considerable amplification effect to the exposure of mETH.
It is worth mentioning that mETH can also be used as margin on Bybit. As is well known, the core function of margin is to optimize and stabilize risk control, market liquidity, and credit assurance. For large capital and trading teams, when an asset is listed on an exchange as margin, it greatly expands the use cases of mETH, and for some hesitant teams, they are more willing to settle funds on mETH. Conversely, as funds continue to flow in, the liquidity of mETH becomes higher and higher, forming a virtuous cycle.
Market hotspots and trends often change rapidly, and project teams and protocols that keep up with the heat can continuously amplify their influence. Where will the future hotspot be? The direction of the market may already be there. In the future, mETH will also cooperate with the long-awaited Berachain and Fuel to strengthen liquidity integration.
COOK Token Economics
COOK is the new governance token of mETH. It is currently mainly used to vote on the direction of the ecosystem and other strategic matters. The total supply is 5 billion, of which 15.1028% will be allocated to qualified users of the first season ecosystem activities.
Of this portion, 5% of the tokens are allocated to mETH, 4% to the Mantle Rewards Station, 5% to the Puff Protocol, 1% to Puff NFT holders, and the remaining small portion is allocated to some joint activity rewards.
It is worth mentioning that at a time when VC tokens are constantly being criticized, few project parties are willing to make changes to the token distribution. Retail investors have become increasingly dissatisfied with the VC's share of tokens taking up the majority, leading to endless selling pressure and being trapped. Fair, or fair. Allowing community members to also participate in the wealth wave and profit is the right solution, and it will receive more and more attention and welcome.
Looking at the overall token distribution of COOK, the share of the core team and private financing is only 10%, while the total amount distributed to the community and the protocol treasury is as high as 60%, which can be said to truly respond to the market's call, and the token distribution design from the beginning has taken into account the concept of fairness.
In comparison, the market capitalization of the leading re-staking protocol Eigenlayer is around $600 million, while its FDV has reached a relatively high $5.6 billion. mETH's current TVL is close to $1.3 billion, while Eigenlayer's is $11.5 billion, the latter being more than 8 times the former. If calculated solely based on the TVL ratio, the estimated FDV of COOK upon launch could be around $700 million.
COOK is expected to launch this month, and the specific details may be subject to change.
From July 1 this year to the beginning of October during the mETHamorphosis event, its data performance has been quite impressive. mETH holders can accumulate points on Mantle by staking, interacting with ecosystem protocols, and adding liquidity, and the points can ultimately be redeemed for COOK.
As the first quarter comes to an end, the activities of the second quarter will be unveiled soon.
Summary
After months of FUD, the Ethereum market has seen a recovery in capital. Many re-staking protocols, after issuing tokens, have experienced a prolonged cooling of the re-staking hype due to the overall market downturn. With the Federal Reserve's interest rate cuts, more yield capital will flow into DeFi, injecting more liquidity. It remains to be seen how the re-staking sector and COOK will perform.
