This proposal is authored by the Mantle Economics Committee (MIP-25).

Background

We have taken into account feedback regarding the use of Mantle Treasury assets to support applications on Mantle Network. Many applications benefit from a foundational amount of liquidity to function and provide a better experience for Mantle users.

While retaining assets in Mantle Treasury is the most secure option, deploying a portion of these assets to support applications may lead to higher levels of success for the overall Mantle Ecosystem. The following proposal outlines an initial strategy for executing this deployment with a focus on risk management.

Proposal

By voting “Yes”, you endorse the following terms:

1. In accordance with the MIP-25 framework, authorize the following new strategies and allowances:

• Liquidity Support for Applications - up to a combined allowance of 60M USDx, 30k ETH, and 120M MNT

  • Ecofund invested applications shall have an individual allowance up to - 10M USDx, 5000 ETH, and 20M MNT

  • Other applications shall have an individual allowance up to - 1M USDx, 1000 ETH, and 2M MNT

• Seed Liquidity for RWA-yield Backed Stablecoins - up to a combined allowance of 60M USDx

• Liquidity Support for Thirdparty Bridges - up to a combined allowance of 10M USDx, and 5k ETH

Note:

• "USDx", "ETH", and "MNT" above refer to various standard, wrapped, and reward-bearing versions of their respective types.

• The above allocations could overlap. For example, the same 60M USDx used to create RWA-backed versions could then be provided as liquidity support for applications.

• The above allocations are the max allowances only. It will likely take some time to ramp up to those limits.

2. Authorize the Economics Committee to engage Service Providers, top on-chain systematic trading firms, to support the deployment of the above strategies. This includes discussions with various parties and, if necessary, negotiation of partnership terms or other commercial agreement regarding liquidity deployment. The Economics Committee is a decision-making body only and shall not directly handle treasury assets.

Details

Rationale

Applications:

• Liquidity is crucial for the proper functioning of many applications, enhancing the user experience in terms of trade execution.

• Some applications have requested greater liquidity support before deployment on Mantle.

RWA:

• Our aim is to source sustainable reward generators from ETH-staking and RWA-backed constituents that Mantle users can participate in, and that applications on Mantle can utilize in their products. ETH-staking is managed by the Mantle LSD project, along with the recent partnership with Lido (see MIP-25).

• Regarding RWA-backed assets, the Mantle core contributor team is in discussions with various issuers. The above serves as a pre-authorization to execute on the partnership and seed liquidity. This seed liquidity will result in a receipt token which will be first held in Mantle Treasury, and subsequently used to support liquidity for applications on Mantle Network. The receipt token may also be redeemed by Mantle Treasury.

Third Party Bridges:

• https://bridge.mantle.xyz/ provides the canonical bridging solution to Mantle Network, and should be used for larger transactions. However, it has certain UX limitations:

  • It only bridges between Ethereum and Mantle Network.

  • L1 to L2 bridging takes at least 64 Ethereum Blocks (~10 minutes) and a moderate amount of ETH L1 gas fees.

  • L2 to L1 requires the challenge period (~7 days) and a moderate amount of ETH L1 gas fees for claiming.

• To enable faster, cheaper and omnichain bridging options for users, Mantle has onboarded several centralized exchanges and permissionless bridges.

• Some permissionless bridges work via a pool-based model and require a baseline level of TVL on each chain. They have also requested support for Mantle-pool TVL before integration. We are requesting authorization to deploy liquidity support solely on Mantle Network.

Criteria for Service Providers

Risk Management and Execution Systems:

• The service provider must rank within the global top 20 players in on-chain systematic trading.

• The service provider shall utilize enterprise-grade systematic trading, risk management, and key management systems.

• The service provider shall possess internal due diligence and risk assessment capabilities for applications and smart contracts.

Reporting Requirements:

• The service provider shall provide a real-time dashboard of their positions, either a custom dashboard or through existing analytics platforms such as https://debank.com/.

• On-chain wallet addresses shall be revealed to the community for independent tracking and transparency purposes.

• All assets shall be held onchain for verifiability.

Principal Protection and Guarantees:

• Assets shall be lent to the Service Provider. Each asset type (USDx, ETH, MNT) will be accounted for individually for profit-and-loss calculation.

• The Service Provider shall provide principal protection guarantees.

  • Special exemptions may apply for impermanent losses arising from major pools, such as USDx-ETH.

  • Special exemptions may apply for the first X% of losses of each principal asset.

  • Special exemptions may apply for gas fees.

• The Service Provider (and/or guarantor) shall be a registered corporation with sufficient net assets to cover the guarantee.

Deployment Strategy

General Priorities:

• The objective is to support liquidity for the proper functioning of applications while maintaining principal protection. As such, the general priorities shall be:

  • Applications types: primitive applications such as DEXs and money markets.

  • Pool types: pure staking pools, single sided pools, USDx-ETH type pools, and lending pools backed by ETH and WBTC collateral.

Risk Control

Risk Management:

• In addition to the high-level strategies and allowances permitted by Mantle Governance above, the Economics Committee shall provide the Service Provider with a list of approved strategies and allowances for individual applications and pools.

• The Economics Committee may request derisking of any application or pool at any time, and the Service Provider shall comply within 12 hours.

• The Service Provider shall perform their own risk assessment and make decisions on deploying to specific applications and pools. As the Service Provider may be liable for principal losses, they will have final decision-making for any deployment. The Economics Committee cannot compel them to enter any position.

Recall:

• The Economics Committee may recall principal assets from the Service Provider at any time. The Service Provider shall return the assets to the relevant Mantle Treasury within 3 days.

Fees and Incentives

Returns:

• Any net returns from asset deployment (such as farming rewards) shall belong to Mantle Treasury.

• Any side-negotiated deals with applications shall belong to Mantle Treasury.

Fees and Incentives:

• The Service Provider shall be compensated in a manner to be negotiated with the Mantle core team under the BIP-19 budget authorization (or subsequent budget proposal updates). This may entail specific performance requirements and vesting rules.

• Profit-sharing arrangements with the Service Provider may apply.