[PASSED] MIP-22: Mantle Token Design, Conversion Parameters, and Asset Handling

[cateatpeanut]

This proposal is co-authored by Cateatpeanut and the Mantle Network team.

Context

BIP-21 has approved the brand and token merger, with pre-authorization for a token conversion plan. It is recommended to hold a formal discussion and vote on key issues concerning the token conversion plan.

Proposal

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

1. The Mantle token, $MNT, shall incorporate functions analogous to the “Upgradability” and “Mint” functions of the $ARB and $OP tokens.

2. The one-way token conversion ratio shall be set at 1 $BIT token to 3.14 1 $MNT tokens. (edited: see Update 1)

3. The Mantle core contributor team shall be authorized to determine the optimal timing and sequence for the delisting of $BIT tokens, listing of $MNT tokens, opening of conversion channels, and the Mantle Network Mainnet.

4. A DEX liquidity pool for $MNT-ETH may be created, utilizing the proceeds from the deconstructed $BIT-ETH pool, and with reference to the intent of BIP-10.

5. A temporary conversion treasury may be established to provide support for the token creation and conversion process.

Supporting Information

Disclaimer: Please note that the following supporting information provides additional context and aspects related to the token plan. While it is not an official component of the proposal, any modifications must conform to the proposal’s terms.

Token Ticker Symbol

• The token ticker symbol $MNT has been chosen due to its distinguishability and availability across major exchanges and aggregators.

Token Functionality

Key design recommendations include:

• Upgradability: the L1 $MNT token will be upgradable using the OpenZeppelin Transparent UpgradableProxy contract, which is also used by the $ARB, $AAVE, and many other reputable protocol’s tokens. This enables the Owner (Mantle Governance) to maintain the $MNT token functionality to support future product and governance use cases, reducing the need for a future token migration.

• Mint: the Mint function allows Mantle Governance to authorize potential future inflation of the $MNT token to support long-term ecosystem development. The $MNT token will be minted on L1.

  • The recommendation is for $MNT to permit Mint once per year with a default setting of 0%. While we see the benefits of this functionality, we do not yet have foreseeable needs for future inflation.

  • This also allows the Mantle community to propose burning Treasury $MNT without as much concern for multi-decade future requirements.

  • As a reference, other L2 tokens such as $ARB permit Mint of up to 2% of token total supply once per year upon governance approval.

• No Special Supply Sync h ronization B etween $MNT on L1 and L2: $ARB and $OP can be minted on both L1 and L2, and require a “bridgemintburn” token function to synchronize total supply. The Mantle R&D team’s recommended approach is a more simplified version where the $MNT token can only be minted on L1. The $MNT token minted on L1 can be bridged to L2 via the canonical bridge without the need for additional supply synchronization.

For more technical details and to provide feedback, please see the following document which will be updated by the Mantle R&D team from time to time: https://hackmd.io/@-KOCYYc7QJeaaCqGkwHGhw/Bkv1lVfEh

Token Conversion Ratio

• The token conversion ratio from $BIT to $MNT is established as 1 to 3.14, congruent with the nickname of Mantle Network Mainnet Alpha, “Pi”. No significant technical issues have been encountered with the use of 3.14 as the conversion ratio. (edited: see Update 1)

Sequence of Delistings, Listings, Conversion Channels, and Mainnet

• The main goal is to ensure a successful launch of the Mantle Network, engagement for the Mantle ecosystem, and smooth transition for the $MNT token.

• Delisting of $BIT tokens and subsequent listing of $MNT tokens on DEX and CEX platforms may have a time gap due to various listing requirements and technical considerations.

• The Mantle Network Mainnet requires $MNT price feeds.

• Potentially controversial decisions will be subject to discussion and consultation with the community through official channels.

Protocol Owned Liquidity

• The $BIT-ETH pool, as referenced in BIP-10, will be deconstructed and replaced with the $MNT-ETH pool on Uniswap v3.

• ETH proceeds resulting from the deconstruction process will be gradually utilized for the construction of the $MNT-ETH pool.

• Any excess $MNT, $BIT, $ETH will be returned to the appropriate Treasury.

• The asset flows will be periodically updated on the Treasury Monitor.

Temporary Conversion Treasury (TCT)

• A TCT may be established to support the token creation and conversion process.

• The TCT will receive all initially created $MNT.

• The TCT will swap $BIT for $MNT with significant holders such as the previous BitDAO Treasury (now Mantle Treasury), and Mantle Network budget multisig.

• The TCT will send $MNT to conversion channels, including a L1 conversion smart contract “L1CSC”, and centralized exchanges who have been approved to support the conversion.

• Please note that the TCT itself does not function as an official conversion channel, and users are strongly advised not to send $BIT to the TCT. Instead, they should rely on the L1CSC frontend to be hosted on mantle.xyz or officially participating centralized exchanges.

• The TCT will receive $BIT before transferring 3.14x 1x $MNT, reducing escrow risk, with the exception of the L1CSC. (edited: see Update 1)

• The final ratio of “total received $BIT units” versus “total sent $MNT units” by the TCT will be 3.14 1.(edited: see Update 1)

• $BIT held in the TCT will be burned, and the TCT will be decommissioned after the completion of conversions.

• The asset flows will be periodically updated on the Treasury Monitor.

Next Steps and Expected Timing

The following actions will be carried out concurrently, all of which need to be completed before the $BIT to $MNT conversion channels can become operational:

• Assessment and incorporation of any feedback into $MNT token functions and the conversion plan.

• Approval of this proposal, with a minimum 7-day discussion and 7-day voting period.

• Conducting an audit of the $MNT token, and the audit report is made available to the community.

• Deployment of the $MNT token on L1, with initial supply under the custody of the TCT.

• Conducting an audit and testing of the L1 Conversion Smart Contract.

• Securing support from select centralized exchanges for the $BIT to $MNT conversion.

• Implementation of the $MNT token on Mantle Network testnet and mainnet.

[cateatpeanut]

Reserved for comments and updates.

Thank you for all the valuable feedback provided on this forum, through community managers, and during the AMA. The purpose of this discussion is to gather sentiment from all stakeholders and community members. It is important to note that forum posters represent only a portion of the feedback we have received.

Here is a response to the more frequently asked or controversial issues:

Update 1

Re: Conversion Exchange Rate

Our initial analysis indicated that the conversion exchange rate decision should be largely sentiment-driven in and in the best interest of Mantle and $MNT. Mathematically, the exchange rate used does not have a dilutive impact since all holders, including the Treasury itself, will maintain the “same share of the pie”.

However, the choice of using 3.14 as the conversion rate has proven to be controversial and has generated negative sentiment instead of a net-positive one. We acknowledge the benefits of keeping things simple, as suggested by the community, and avoiding unnecessary distractions from more important matters.

Recommended: Change to Proposal Term #2

“2. The one-way token conversion ratio shall be set at 1 $BIT token to 1 $MNT token.”

Re: Conversion Costs

To enable the conversion process to be free for users, we recommend implementing the following method:

Recommendation: A Conversion Cost Rebate Program

For a series of periods after the conversion window is open, we will:

1. Query on-chain records of all smart contract conversions during the period.

2. Filter for malicious behavior and other criteria.

3. Determine the target amount of rebate.

4. Send qualified users the target amount of rebate in ETH.

Additional notes:

5. Each period will be approximately 1 month, and we will run this program for up to 5 periods.

6. We will build a simple dashboard for users to check the status of their rebates.

Under normal circumstances, all users who utilize the conversion smart contract will be rebated the their exact amount of the ETH gas fee. Items #2 and #3 have been included to mitigate intentional griefing that could lead to unnecessary cost to Mantle. While we considered other more automated methods, they carried a high risk of exploitation or griefing.

Re: Mint Function and Potential Supply Changes

The decision to Mint will be determined by Mantle Governance, which currently involves the forum discussion process and a token holder vote. As an additional safeguard, it is anticipated that a series of discussions and MIPs will be required before distribution of minted tokens can take place:

1. Approval of the upper bound of the Mint, which is currently set at 0%.

2. Determination of whether and how much to Mint within the upper bound. By default, there will be no annual Mint, and based on the current treasury resources, there is no foreseeable need for Minting in the near future.

3. The Minted tokens will be held in Mantle Treasury, under the control of Mantle Governance. This means the minted tokens will not immediately impact the circulating supply. The distribution of minted tokens from the Mantle Treasury will be carried out through the Mantle Governance process, likely via a budgetary MIP.

Regarding aggregators and the perception of supply:

• Aggregators such as Coingecko do not necessarily consider the ability to mint to be reported as “infinite” Max Supply. Examples include $ARB and $OP.

• One significant advantage of the Mint function is the increased flexibility it provides Mantle to vote on burning $MNT tokens held in the treasury, thereby reducing the Total Supply, Max Supply, and FDV. We are currently conducting an analysis on this matter, and it will be the subject of a subsequent discussion and proposal.

[phantong]

what will happen if they are not agreed soon.?

[PavelG]

A conversion rate of 3.14? I hope there will be no problems

[Gx]

It’s $BIT for $MNT first. Then we’ll see what the price of $MNT is before mainnet online, right?
So what would you do at different prices?

[ompong]

1. What happens if the $BIT token is not converted to $MNT by the holder. is there a conversion deadline?

2. Is there a replacement gas fee for the converted process of $BIT to $MNT for holders?

3. Is there a minimum $BIT token to convert?

[Pierrexp]

Hello,

Thank you for your work.

I believe the conversion rate is not very good. Why not have a 1:1 ratio? I think it will confuse everyone (including oracles) and complicate the transition. I understand that the number Pi had significance, but honestly, I think we can do without it.

Another concern is the conversion. As I mentioned, many holders have a small amount of BIT, and transactions on L1 are expensive. Will we add the ability to bridge BIT to Mantle and perform the conversion there? This means we would need to keep the tokens after the mainnet, but at least it could be an option, perhaps cheaper than the L1 transaction (to compare the gas price for conversion and the gas price for bridging).

Regarding the ticker, MNT, another project is already using it.

And finally, the fact that it’s not possible to mint a token on L2, I don’t fully understand all the technical implications, but I suppose if others were doing it, they must have good reasons… I think this particular point should be discussed further.

[jjangpal123]

Conversion rate is not too bad.

[yipfs]

what’s the rational to have 1:3.14 BIT to ?MNT conversion? why is that 3.14 Pi matter? and being included in such conversion proposal?

[DTravel]

If the total supply of $BIT is 10 billion, the total supply of MNT would have to be 3.14x larger so that 1 $BIT can be converted for 3.14 $MNT. Before placing my vote I would like to know the total supply of $MNT - If it’s 10 billion too, then my vote is NO

[Converge]

It is also interesting to know the maximum supply of $MNT tokens

[Afia]

i am with the view that the conversion rate should be 1:1

Kindly reconsider that

[Nayeem]

If MNT total supply is 10 billion than conversation ratios should 1:1
And
BIT token can be delist

[Noddy]

1. Is there a replacement gas fee for the converted process of $BIT to $MNT for holders?

[TaiwanDAO]

1: Tokens should be exchanged 1:1, instead of becoming a total of 31.4 billion

2：Can additional tokens be issued? Who owns after the issuance? Can it still be a DAO after additional issuance?

The biggest problem is the token exchange ratio. You can issue 2% of the total amount of tokens at will every year. I will vote no

[cryptoAYA]

Greetings,
Despite the fact that $BIT was much better in many forms than $MNT, but I support this project as the ultimate proposal is on the favor of the Mantle project.

[La]

Good day!
I do understand that exchange 1:3,14 looks beautiful and stylish according to Mantle marketing strategy, but 1:1 would be much easier for everybody, and wouldn’t confuse holders. In my opinion

[Denys]

Just put some rate to clarify max.supply

[Aghateru1]

Nice move, but I think it will be better if we can convert our test Bit to MNT too

[Argetlames]

Why wouldnt community be able to vote when the mnt would be listed ?