Summary

This proposal introduces an Enhanced Index Fund product designed to provide exposure to a systematically rebalanced basket of components, including BTC, ETH, SOL and USD. The fund will incorporate yield-generating assets such as mETH, bbSOL and sUSDe to enhance returns for subscribers. The fund will utilise institutional grade custody, administration and reporting.

Proposal

By voting “yes”, you endorse the following:

1. General resource allocation to the development and operations of the "Mantle Enhanced Index Fund" (as described in this document), and structuring as a separate entity.

   • Note: Such resources will be funded by the Mantle Core Budget authorized by MIP-31 to start with. In the future, the product, as a separate entity, will maintain its own financial books (e.g. revenue from management fees, and expenses). Mantle will be an owner/investor of the entity as represented in its cap table, and qualified to receive any dividends or other proceeds.

Background

Mantle has historically contributed to retail-first core products like mETH Protocol (a staking and restaking protocol), FBTC (a multichain pegged-BTC product) and Ethena's USDe. These have gained remarkable traction; mETH is the top-4 LST according to DefiLlama, FBTC surpassed $1 billion TVL in less than six months since launch and Ethena which has ~$6bn TVL.

In its 2025 letter to token holders, Mantle outlined its vision to build banking for the next generation. To advance this goal, the Mantle core team is proposing the launch of a new innovation pillar tailored to meet the needs of institutional investors and family offices across traditional finance and web3, starting with an institutional-grade enhanced index fund.

Motivations and Objectives

The goal is to create a product that provides institutional investors — both crypto-native and those from traditional finance — with convenient access to crypto market 'beta' exposure with improved risk-return profiles. The product has an initial target of $1 billion AUM, with Mantle Treasury being an anchor participant.

1. Establishing Pathway Into Traditional Finance

In order to build an infrastructure fit for the next generation of banking needs, it is key for Mantle to begin developing pathways into traditional finance. Regulatory inroads have gained significant clarity, and the signal for traditional finance adoption of digital assets has never been more optimistic; Bitcoin ETFs saw $33.6 billion in inflows in 2024 and is expected to continue growing in 2025.

The product will be launched in partnership with a market-leading tokenization platform. Coupled with a fund structure that is familiar to traditional finance, Mantle's enhanced index fund product will be an ideal vehicle to lead the foray into traditional finance adoption.

2. A convenient and risk-return optimized product for Mantle Treasury, and incoming institutional investors.

The enhanced index fund will consist of BTC, ETH, SOL and USD which will be systematically rebalanced. These components will be implemented via yield-bearing tokens such as mETH, sUSDe, bbSOL. This ensures close synergy with the Mantle ecosystem, allowing us to appeal to institutional investors while being fully crypto native.

The fund will provide broader diversification and crypto market exposure versus a single asset. Yield bearing assets (tokens) held in institutional grade custody are an acceptable risk-return (versus vanilla assets). The future ability to tokenize will be an added convenience, e.g. to enable rehypothecation in DeFi.

3. Mantle Strategic Value

The fund will start as a wholly owned product of the Mantle ecosystem. It will also serve as an adoption channel for existing Mantle and partnered assets such as mETH, FBTC, sUSde, bbSOL.

Key Features

1. Selected Components, Systematically Rebalanced

The basket will maintain exposure to the crypto industry's growth. Components should represent durable winners, avoiding short-term hype or frequent delisting. Component selection will be guided by a committee or decision-making framework. The components must be attractive, and sufficiently uncontroversial, to Mantle EC and the target subscriber demographic. Components will be rebalanced at fixed intervals based on predefined, automated, and unopinionated rules.

2. Optimized Underlying Strategies

Component exposure will be achieved through risk-return-optimized strategies, the simplest of which will be yield-accumulating tokens. For example, USD exposure such as sUSDe, and ETH exposure via mETH. Strategy selection and risk limits will be opinionated and negotiated for optimal outcomes, including the preference of large subscribers, and strategic synergies for Mantle and other development partners.

3. Onboarding, UX, and Distribution

The product will aim at qualified investor adoption, and will partner with market-leading fund brokers to provide access to a network of accredited investors, tokenization and fund administration, UX and regulatory compliance.

Details

Disclaimer: The following is not part of the official proposal. It aims to provide initial perspectives on product specifications. Changes are to be expected.

Asset Custody

Asset allocation strategy will be managed by Mantle as the investment manager, and assets will be custodied with industry-leading custody providers for security and operational efficiency. While regulations do not require the fund to custody its assets with a qualified custodian, we are considering such an arrangement for the purpose of fund segregation and safety.

Project Milestones

Milestone 1: Fund Launch (H1 2025)

• Establishment of fund structure and regulatory framework

• Establishment of tokenization, fund flow and custody setup

• Iteration of fund strategy and token selection based on investors' feedback

Milestone 2: Scaling

• Formalization and establishment of an index that tracks the strategy laid out in Milestone 1.

• Expansion of distribution channels; establishment of dedicated BD and sales team, engaging with broker-dealers across regions

Milestone 3: DeFi Utility

• DeFi extension - expand the fund token utility in DeFi applications