[ARCHIVED] Mantle LSD

Liquid Staking Derivatives (LSD) has the potential to attract new users to the ecosystem. Mantle LSD is a solution that enhances staking liquidity on Ethereum, but it may create competition and reduce profitability for existing participants. However, the benefits and potential of Mantle LSD are significant.

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LSD will be a huge part of crypto, so its good to have oportunities to have it on chain.

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I think this will also poses another delay for the project to be lunch

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I think there are some whitelabel solutions that can speed up the process and lower like the one from Ankr

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Hi Mantle community,

This is @Willem with Kiln, the staking technology provider. I posted a reply in the Lido proposal thread to present a dedicated Mantle LST launched in collaboration with Kiln as an alternative. We’d like to contribute to the LSD discussion here as well and include the proposal for visibility.

A custom Mantle LST in partnership with Kiln is possible right now and would allow the community to meet primary objectives mentioned above while helping to keep the network decentralized and offering a number of key additional perks which I will outline below.

Mantle can own its token and control the design. With the Kiln Onchain platform, Mantle can easily configure and deploy a liquid staking smart contract, enabling the creation of its own branded LST (e.g. mtETH). This integration grants flexibility to choose validator providers. Mantle users can deposit ETH to acquire the LST, enjoying auto-compounding and restaking features in DeFi.

There are two token models you can choose from, both with distinct characteristics:

aTokens: the amount you hold will remain constant while their value grows over time. Their value will increase as the pool generates more rewards.

cTokens: maintain a fixed exchange rate with the ETH. As rewards are earned in the pool, the number of cTokens you hold increases. This allows you to accumulate a greater quantity of tokens representing your share of the pool’s rewards.

aTokens are highly composable, relative to cTokens, and can be seamlessly integrated and utilized across diverse DeFi protocols, applications, and platforms. While aTokens can be advantageous with additional composability, they may lead to increased taxable events in certain jurisdictions.

Freedom extends into governance. Mantle has the choice to manage the integration contract either independently or through multisig. These thoroughly audited contracts offer numerous parameters. Partnering with Kiln for the token provides Mantle the flexibility to set end-user fees, a feature not available with Lido. With this capability, Mantle gains the flexibility to set an initial rate at a comfortable threshold and make updates later if necessary, be it for commercial reasons or to support network decentralization, as discussed in Vitalik’s article on published last week on The Defiant addressing Lido’s dominance.

Revenue share in perpetuity. Rather than relying on an unprecedented 1 year revenue share from Lido that needs to be re-approved on a regular basis, Mantle would own the commission structure for users of the LST forever.

Control over validator operations. Because of Kiln Onchain’s modular integration format for validator operators (think lego bricks), Mantle would have full control over how many validator operators to include as well as which ones. This allows Mantle to have a direct say in the decentralization of ETH staking.

A Mantle-branded LST serves as a powerful marketing tool, enhancing visibility and growth. We welcome the community’s feedback on this idea, as we believe a dedicated LST aligns with our vision for a thriving DeFi ecosystem.

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Thanks to the mantle team for this robust information. I understand that for the staking, that we have to deposit Eth to receive mntETH and while redeemng, we deposit back our mntETH to receive back EHT while the mntETH gets burn. And that global deposit limit will also be used to promote stability and mitigate potential risk at the initial stage of the mantle LSD.

This is great, ensuring the healthiness of the entire mantle ecosystem remains paramount and i am fully in support

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Every re-staking protocol has limitations or caps to ensure weighted distribution, decentralization and security. Eigen Layer’s re-staking caps have already been met (just shortly after the protocol went live) and they are working to increase them at the moment. Until then, you cannot restake with Eigen Layer, if nothing has changed since my last conversation with their team. Their estimated date for raising the caps is only 07/10/23, and they are raising the caps from 3200 to 15000 LST’s I believe, but if Mantle provided their own liquid staking protocol, it would provide additional re-staking options. I still need to finish reading through the detail above, but so far, considering the additional attraction to the network it would provide, among other benefits, I’m all for it.

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Hey Mantle Community,

I’ve spent some time going through the comprehensive proposal and have written a short summary to organize my thoughts on the topic:

  1. LSD Protocol Concept: The idea of a liquid staking derivatives protocol pooling ETH for staking and providing tradable mntETH receipt tokens is compelling and definitely beneficial to the Mantle ecosystem​.
  2. Strategic Analysis: The objectives align well with Mantle’s broader goals. Positioning Mantle LSD under Mantle Governance and making it the preferred solution for ETH staking of the Mantle Treasury and supporters would significatly boost the ecosystem​.
  3. Economics: The economics seem sustainable through the LSD service fee. Achieving strategic benefits with Mantle products and $MNT would be necessary to make the project worthwhile​.
  4. Technical Aspects: The technical details are well-defined, including the roles of the LSD Administrator and Operator. The mntETH token model, a value accumulating model, seems sound​​.

We at Luganodes are really excited for what is to come with this protocol and are in full support of the Mantle team. However, we had a few questions as node operators:

  1. Can you provide more details on how partnerships with external node operators will be established and maintained?
  2. Will there be a vetting process to ensure the quality and reliability of these node operators?
  3. How will the selection process work?

This will help prepare us to better contribute towards the mantle network.

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@cateatpeanut - thank you for sharing such an extensive proposal. I would like to propose that Mantle considers leveraging the upcoming white-label liquid staking solution from StakeWise (V3). StakeWise V3’s architecture will allow Mantle to build this entire solution out of the box. This will save significant costs and streamline time to market, whilst still providing Mantle with the necessary control over its staking solution and the ability to market the solution entirely as its own.

Mantle will be able to launch a fully customised public staking pool on StakeWise V3 that can receive ETH delegations in a trustless, non-custodial manner. ETH delegated to the pool will be tokenised into the unique ERC-20 token that Mantle creates, for example, Mantle Staked ETH with the ticker mntETH. mntETH will be a repricing token, increasing in price with respect to ETH as staking rewards accrue.

Mantle specifies the staking fees during Vault creation and receives 100% of these revenues. Consequently, this solution is free for Mantle, given StakeWise does not charge for the use of its Vaults infrastructure.

Mantle is free to partner with its preferred node operators to stake on its behalf and/or become a node operator itself (many leading commercial node operators are already set up and running on StakeWise V3). It is simple to add and remove node operators at any time and Mantle could even force close validators and evict node operators should the need ever arise. Mantle can run whatever staking configuration it prefers, such as specific EL/CL clients or custom MEV relays, and control the upgradability of its own smart contracts.

In essence, V3 is a comprehensive package solving all of Mantle’s needs (smart contracts, oracles, key management, exchange rates etc…) whilst still giving Mantle full control and the freedom to create the desired ecosystem around its LST, mntETH. It would be great to discuss this opportunity further – is there a time this week that would suit you best for a call?

Note: I am from the core team at StakeWise, a platform that has been providing liquid staking services on Mainnet since early 2021

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Please refer to [PASSED] MIP-25: Mantle Economics Committee, and ETH Staking Strategies for the most recent discussion on this thread. This thread will be archived.

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