Mantle Network 20,000-word research report: From technical features to token models, gain an in-depth understanding of modular Layer 2 rising stars

Mantle Network is a modular Layer 2 network compatible with the Ethereum Virtual Machine (EVM). It is incubated by BitDAO and uses roll-up technology and a decentralized data availability layer (Mantle DA) to provide high throughput, low fees and fast determination. Sexual services, while ensuring the security of the Ethereum level. At the same time, multi-party computing and a decentralized sorter are used to enhance the security and decentralization of the network. The goal of Mantle Network is to provide the Ethereum ecosystem with a high-performance, low-fee, easy-to-use platform to facilitate mass adoption of decentralized applications.

1. Research points

1.1. Core investment logic

Mantle Network is a L2 scaling solution based on Optimistic Rollup technology, which provides EVM compatibility and modular design. Its core investment logic is mainly reflected in the following aspects:

Mantle Network is incubated by BitDAO, a well-known DAO organization, so it has significant advantages in terms of technical team strength and financial support. This laid a solid foundation for Mantle to stand firm in the fierce Layer 2 competitive landscape. At the same time, Mantle has reached strategic cooperation with a number of top projects, which will help it quickly integrate into the Ethereum ecosystem and gather users and application scenarios. As the Ethereum ecosystem continues to develop and grow, Mantle can further open up huge market space. It can be said that Mantle has strong technical and financial backing, broad market prospects, and is building a win-win ecosystem, which is the key to its long-term investment value. In addition, from the perspective of asset allocation, Mantle Treasury holds a large number of mainstream digital assets, which provides it with stronger liquidity support and market-making capabilities, which is conducive to consolidating the price of MNT tokens. Compared with other DAOs that only hold governance tokens, Mantle's richer asset reserves also enable it to fully finance ecological construction. Mantle can use its asset advantages to establish ecological funds and attract high-quality projects. This is also a key support for Mantle's long-term development prospects as one of the important Layer 2 networks.

A sound governance mechanism is conducive to the long-term stable value appreciation of tokens. BitDAO, the organization behind Mantle Network, has taken various measures to improve the long-term stability and appreciation potential of its token economic model. For example, the donation model of Bybit has been changed, the amount of donations will be reduced in a fixed period, and the circulation of tokens will be reduced; the inflation risk of treasury tokens will be analyzed through governance theory; learning from other L2 token models will control the increment to no more than 2% of the total amount, etc. These governance measures reflect that the team behind Mantle Network attaches great importance to maintaining the value of tokens, and is good at summarizing the experience of other successful cases, which also makes MNT tokens have better long-term appreciation potential than encrypted assets. It is foreseeable that with the maturity of the ecological development, Mantle Network will continue to improve the governance mechanism and formulate more policies to enhance the intrinsic value of tokens based on the collective wisdom of DAO, which lays the foundation for the long-term investment prospects of MNT.

Mantle Network's multiple operating mechanisms provide MNT tokens with a way to reduce circulation. Unlike other L2s that use ETH as Gas tokens, MNT tokens are regarded as the Gas tokens of the Mantle chain. With the stable development of the ecosystem and active interactions on the chain, MNT will be consumed steadily without the need for other artificial controls. is a stable deflation model. At the same time, through multiple token pledge scenarios, it will effectively reduce the circulation of tokens and increase the value of tokens. The economic model design of Mantle Network allows MNT to have a circulation reduction mechanism in many aspects, which provides support for its long-term investment value and is a core logic of MNT investment.

Mantle Network adopts a modular technical route, which reflects the forward-looking of its technical system. The functions of each component of Mantle are clearly divided, and the loosely coupled design is adopted, which ensures the flexibility of the system and enables it to adjust components as needed to adapt to technology and business changes. For example, the data availability component EigenDA can be easily replaced with other storage solutions. Compared with the Monolithic architecture, Mantle's modular system is easier to update and iterate, and its security and stability are also higher. System problems can also be solved by upgrading individual components , rather than requiring a full refactoring. In addition, modularization also enables third parties to access or use only some functions of the Mantle system according to their needs, which expands the scope and scenarios of the system. This design concept is worth learning from other projects, and it is also the technical basis for Mantle's long-term investment value.

Mantle Network achieves ultra-high scalability that is difficult to achieve with other L2 networks. Mantle uses Optimistic Rollup and independent data availability layer EigenLayer, which can provide lower cost and faster transactions. This architecture is different from other Ethereum Layer 2 expansion solutions such as Cartesi, Loopring, Polygon, Arbitrum, etc. Although Mantle is not the only L2 solution that uses an independent data availability layer, its data availability layer MantleDA is decentralized, while other The data availability layer of the L2 network mostly adopts a centralized architecture. This allows Mantle to achieve true decentralization and high scalability. Through this technological architecture innovation, Mantle is expected to provide transaction performance and low-cost advantages over other L2 networks. This increased scalability will allow for widespread adoption and competitive advantage. Therefore, Mantle's ultra-high scalability is an important differentiating technical advantage and investment value point.

Mantle Network's security is built on Ethereum's powerful consensus mechanism and verification node set. Mantle's state and transactions are verified by Ethereum's verification nodes in the same manner as transactions on the L1 chain. That is to say, the set of nodes that verify the security of Mantle transactions is consistent with that of Ethereum, which is different from other L2 networks that use their own consensus models. Mantle directly reuses the security model of Ethereum. Therefore, Mantle can inherit the strong security of Ethereum, and its security is not weaker than that of the main network of Ethereum. This design that closely integrates the security model of Ethereum makes Mantle have unique advantages and disadvantages in terms of security compared with other L2 networks. Higher reliability. This is a core competitiveness and investment value of Mantle Network.

1.2. Valuation

According to CoinGecko data, as of September 3, 2023, the $MNT token price was US$0.45, the market value was US$1.459 billion, the circulation volume was 3.234 billion coins, the total supply was 6.219 billion US dollars, and the full circulation market value was US$2.805 billion. After in-depth analysis and value assessment of the Mantle Network project, we believe that the $MNT token has a certain degree of high valuation at the current stage, but in the long term, if Mantle can realize its technical commitments and steadily develop the ecosystem, it will fully reflect With its technical advantages, ecological potential and market space, its valuation will have room for improvement.

We will elaborate on the valuation analysis method and basis of Mantle Network in the follow-up report (6.2 Project Valuation Level). At the same time, we will continue to pay attention to its ecological development trends in order to adjust its valuation judgment in a timely manner.

1.3. Project Risk

The risks currently faced by Mantle Network are mainly: competitive risks in the fierce Layer 2 competitive environment, technical security risks, risks in the early stages of project development, the negative impact of poor performance of BIT tokens on MNT, and the OP it represents. There is a risk that the technical direction of Rollup will no longer be supported by the community. For details on specific project risks, see 6.3 Project Risks.

2. Project Overview

2.1. Project business scope

Mantle Network is an Ethereum Layer 2 solution based on the Optimism OVM architecture design. It adopts a modular design and attempts to use EigenDA as the data availability layer and Specular Network's fraud proof system to achieve transaction validity proof.

According to official information from Mantle Network, in addition to serving as an L2 expansion solution, providing high-speed and low-cost on-chain transactions, and establishing a sustainable public chain business model, its business scope mainly includes:

1) Mantle LSD (coming soon)

Mantle LSD is a decentralized staking service based on Lido, which allows users to pledge ETH to Ethereum 2.0 and obtain mntETH as a certificate. Mantle LSD aims to take advantage of the synergy of the Mantle Network ecosystem and become the preferred solution for ETH liquidity staking in the Mantle ecosystem. It can reduce the deposit cost of Mantle, and also allow third-party applications to use and expand without permission. Mantle LSD also has a simple and secure system architecture, which can use the existing capabilities of the Mantle ecosystem, such as community, governance, brand influence, etc., to promote the development of the Mantle Network ecosystem.

2) Mantle EcoFund

Mantle EcoFund is a USD 200 million eco-fund provided by Mantle Treasury, co-invested in a 1:1 ratio with strategic investment partners. The main goal of EcoFund is to promote the adoption of developers and DApps on the Mantle network, while also considering the sustainability and returns of the fund. EcoFund will prioritize investing in teams building high-quality and innovative projects within the Mantle ecosystem, and will increase investment in potentially outstanding projects when appropriate.

3) EduDAO

EduDAO is a decentralized autonomous organization (DAO) that connects different university ecosystems to enhance collaboration and data exchange, cultivating a new generation of blockchain and Web3 innovators. EduDAO is funded by the BitDAO treasury and serves as an independent steering committee that allocates up to $11 million annually for project funding, research, and independent product development. EduDAO’s university partners include Berkeley RDI, Berkeley Blockchain, Penn Blockchain, Harvard Blockchain Club, MIT Sloan Blockchain Club, Michigan Blockchain, USC Blockchain, Oxford Blockchain Blockchain Association and Tsinghua University Student Blockchain Association. EduDAO's goal is to develop the next generation of leaders and creators for the blockchain industry.

4)Game7

Game7 is a game accelerator whose goal is to advance the world of license-free and interoperable games. Game7 provides key tools for game developers, such as NFT market, cross-chain bridge, game DAO, etc.

Both Game7 and Mantle Network are projects incubated by BitDAO, and they have a close cooperative relationship. Game7 will use the infrastructure provided by Mantle Network to provide high-quality user experience and ecological interconnection for the game projects it incubates and invests in.

2.2. Team situation

2.2.1. Overall situation

As a Layer 2 network solution, Mantle Network is incubated and supported by the well-known DAO organization BitDAO. The original concept prototype for Mantle was proposed by Bybit CEO Ben Zhou and other prominent members of the crypto community, including Sreeram, Dow Jones and Cooper Midroni from EigenLayer. The team consists of more than 50 professionals from different fields and backgrounds, working under a flat management structure.

2.2.2. Team background

Mantle Network's founding background, resource commitments, future vision and other aspects are inseparable from the organization behind it, BitDAO. In order to fully understand the historical origins and development of Mantle Network, it is necessary to go back and explore the related history of its incubation organization, BitDAO. . Mantle and BitDAO can be said to be two components of one body. The success of Mantle depends on BitDAO's strong resource support and common vision and goals.

1) BitDAO

BitDAO was created in 2021 by Daniel Yan and Ben Zhou, the co-founders of Bybit, a large encrypted derivatives exchange in Singapore. The treasury assets come from fundraising and donations. In June 2021, USD 230 million was raised in private financing. Investors included Founders Fund, Pantera Capital, Dragonfly Capital, etc. In August of the same year, BitDAO completed the auction through the BIT-ETH crowdfunding pool of the MISO platform under SushiSwap, and issued 2 100 million BIT, raising 112,670 ETH (valued at $360 million at the time).

BitDAO is one of the largest DAO organizations to date. Its DAO treasury manages assets worth approximately US$3.4 billion, mainly composed of BIT, MNT, ETH, USDC, and USDT.

The reason why BitDAO is so popular is inseparable from the contribution of Bybit, the backer behind it. As the largest supporter of BitDAO, Bybit promised to regularly donate 0.025% of its futures contract trading volume to the BitDAO treasury. According to some public data, from July 2021 to June 2022, Bybit donated a total of more than $1 billion to BitDAO. Tokens. In June 2022, Bybit announced that it will continue to regularly donate tokens to BitDAO in the next 4 years, but the number of donations will gradually decrease. Specific daily donation information and announcements may need to be obtained through BitDAO community announcements.

2) Ecological merger

In May 2023, BitDAO passed the BIP-21 proposal, completed the merger with Mantle Network, and unified the brand and token as Mantle (MNT). This establishes a larger ecosystem. The MANTLE ecosystem will inherit BitDAO's vision and obtain its funding and community support for the operation and ecological development of the Mantle network. BitDAO's token BIT is also converted at a 1:1 ratio. MNT. The merger of Mantle Network and BitDAO makes the new Mantle ecosystem the largest vault in the crypto industry, worth over $3 billion as of this writing.


It can be seen that Mantle has strong support from BitDAO and strong financial strength. Behind it is the centralized exchange Bybit’s exploration of decentralization, which is conducive to the future development of the Mantle network. At the same time, the unification of the token economy also integrates ecological resources. It provides a strong guarantee for the further development of the project.

2.2.3. Core members

Arjun Kalsy: The ecosystem leader of Mantle Network. He is responsible for the project’s marketing and ecological construction. He is a successful blockchain entrepreneur and consultant, and was the Vice President of Growth at Polygon, responsible for the platform’s business development and ecological expansion. He has also participated in several major corporate collaborations, such as Reddit, Instagram and Disney. Prior to that, he was a client relationship manager at Playment, where he helped clients train high-precision artificial intelligence/machine learning computer vision models, with a focus on enabling applications in autonomous driving and transportation.

Joshua Lapidus: Mantle Network's strategic advisor, he is responsible for assisting Mantle Network's development and expansion, as well as cooperation and interaction with other Web3 ecosystems. He is the current host of Unemployable, a podcast for freelancers, independent workers, and the self-employed. He also serves as a writer for BanklessDAO and founder of three successful NFT projects: NFTP's Rainbow Rolls, ETHDenver's BufficornBUIDLBrigade, and Public Nouns (a fork from NounsDAO dedicated to providing public goods in creative ways. funds).

Pranjal Bhardwaj: One of the co-founders of the Mantle Network project. Pranjal had worked in the encryption field for many years before joining BitDAO as a senior R&D engineer at Polygon. At BitDAO, Pranjal was in charge of its R&D team and participated in several projects incubated by BitDAO, including Mantle Network. In the Mantle Network project, Pranjal Bhardwaj serves as the technical director, responsible for the design of underlying technologies such as blockchain and smart contracts. He is one of the key members of the Mantle Network technical team and played an important role in the technical architecture design of the project.

Sreeram: Co-founder and CTO of Mantle Network, and co-founder and CTO of EigenLayer. Sreeram is an experienced software engineer and architect who has been responsible for projects in distributed systems, big data, machine learning and other fields at companies such as Dow Jones and Cooper Midroni. He is the main designer and developer of Mantle DA, focusing on providing an efficient and secure data availability layer.

Other members: Mantle Network’s team also includes many other outstanding engineers, designers, operators, marketers, etc., who are responsible for different aspects of Mantle Network, such as network development, contract writing, interface design, community management, and brand promotion. wait. Together they form the core strength of Mantle Network and contribute to the development and growth of Mantle Network.

2.3. Financing situation

As a project incubated by BitDAO, Mantle has not conducted independent public financing. Mantle was initially funded by Bybit, but after the BIP-19 proposal was passed, it was changed to be funded by the Mantle budget managed by BitDAO. According to the Mantle core budget address officially provided by BitDAO, its existing funds are more than 18 million US dollars.

2.4. Past development and roadmap

2.4.1. Past development

2.4.2. Current progress

According to information on its official website and forums, the main work that Mantle Network is currently doing or planning to do is:

▪ Improve and optimize the technical architecture and functions of Mantle Network, including EigenDA, MPC, decentralized sorter, etc.

▪ Promote the ecological construction and partnerships of Mantle Network, including integration and support with the Ethereum protocol, cross-chain bridges, DeFi applications, GameFi applications, etc.

▪ Publish and operate Mantle Network's own products and services, including LSD (Liquidity Staking Derivatives), EduDAO, Game7, etc.

▪ Establish and manage Mantle Network's ecological fund and treasury, including providing funds, resources and incentives for ecological projects and developers.

▪ Enhance and expand Mantle Network's community and brand, including organizing various activities and competitions, publishing various promotional and educational materials, establishing various social media and communication channels, etc.

2.4.3. Development plan and roadmap

According to the information on the project official website, the future development plan and roadmap of Mantle Network are as follows:

▪ September 2023: The mainnet Beta version will be launched, providing more stable and reliable network services and supporting more DApps and protocols.

▪ October 2023: Launch the EigenLayer data availability layer, and use the method of remortgaging ETH to inherit the security and decentralization of Ethereum.

▪ November 2023: Launch of multi-party computation function and use Threshold Signature Scheme (TSS) technology to improve the accuracy and privacy of off-chain transactions.

▪ December 2023: Decentralized collator functionality launched and provides secure and trustless block production by rotating a permissionless set of coorters.

▪ January 2024: Launch the cross-chain bridging function and achieve interoperability with other L2 projects and public chains.

▪ February 2024: Launch the NFT market function and support users to create, trade and display NFT on Mantle.

▪ March 2024: Launch the DAO function and allow users to participate in Mantle’s governance and decision-making through $MNT tokens.

3. Project Analysis

3.1. Project Background

The background of Mantle Network is mainly based on the following two aspects:

1) Market trend background

The birth of Mantle Network took place against the background of the rapid development of the Ethereum L2 field and the tightening of global supervision. With the continuous rise of DEX, there is an obvious trend of cryptocurrency trading volume migrating from CEX to DEX. However, the high gas fees and inefficient throughput of Ethereum L1 limit the development of DEX and DeFi. Therefore, the L2 extension solution becomes the key to solving this pain point. The Ethereum Cancun upgrade planned for November 2023 will significantly reduce L2 storage costs and further promote innovation and competition in the L2 field.

In addition, the wave of compliance has spawned an efficient Layer 2 era. As regulators become more stringent on the use of encrypted assets, compliance has become an important issue in the blockchain industry. This has prompted many Layer 2 projects to adopt a token-free issuance model and make profits through Gas fees and MEV revenue. The current mainstream Arbiturm and OP adopt a centralized sorter architecture. This efficient setup can not only enjoy the dividends brought by Layer 2, but also better cope with regulatory requirements. It is foreseeable that under the trend of compliance, the asset-light Layer 2 network will be deployed more quickly and form large-scale applications, which is almost the deterministic future of Layer 2 development. As a new generation of Layer 2 network, Mantle is also facing the impact of changes in the regulatory environment. Adapting to compliance will be an external situation that Mantle needs to pay attention to. It will be launched together with other Layer 2 projects to jointly promote the arrival of the Layer 2 era.

2) Technical background

In the L2 rollup technology camp, both OP fraud proof and ZK zero-knowledge proof have their own advantages and disadvantages. Storage cost and computing cost are the challenges they need to face. In addition, most existing solutions use centralized sequencers, which can easily lead to single points. Fault. As an Optimistic Rollup solution, Mantle's key innovation lies in its modular network architecture design. Mantle can decouple and optimize different components such as transaction execution, data storage, and confirmation processes. This modular solution can improve network throughput and Scalability without compromising security also enables Mantle to achieve more cost-effective contract development and deployment. At the same time, in order to solve the problem of sorter centralization, Mantle Network plans to decentralize the sorter in the future and allow the community to participate in the operation and governance of the sorter, thereby improving the decentralization and attack resistance of the network.

In addition, the current OP fraud proof challenge period is 7 days, which means that users need to wait 7 days to withdraw assets from L2 to L1. This has a certain impact on user experience and liquidity. To solve this problem, Mantle Network plans to shorten the challenge period to 1 to 2 days by implementing multi-party computation (MPC).

3.2. Project Principle

The core principle of Mantle Network is to use Optimistic Rollup to realize the L2 expansion solution. Optimistic Rollup refers to a technology that uses a fraud proof mechanism to ensure the security and synchronization between the L2 network and the L1 network. The basic principles of Optimistic Rollup technology are as follows:

**1) Deploy a fraud proof contract on the L1 network, **to receive the block hash from the L2 network, and provide a challenge and proof mechanism.

**2) Run an execution layer on the L2 network, ** used to execute transaction requests initiated by users on the L2 network, and update the status on the L2 network according to the state transition rules.

**3) A sorter is selected on the L2 network, which is responsible for collecting user transaction requests, packaging them into blocks in a certain order, and submitting the block hash to the fraud proof contract.

**4) Run multiple verifiers on the L2 network, **responsible for monitoring the block hash on the fraud proof contract, replaying the transactions in the block according to the state transition rules, and verifying its correctness.

**5) If the validator finds that there are incorrect or fraudulent transactions in the blocks submitted by the sequencer, ** they can launch a challenge to the fraud proof contract and provide corresponding evidence. If the challenge is successful, the orderer will be penalized and wrong or fraudulent transactions will be rolled back. If no one challenges the block submitted by the sequencer within a certain period of time, or the challenge fails, then the block will be considered valid and the transactions in it will be finalized.

Next, let's compare the network architecture of Mantle Network:

Image source: Mantle Network official website DOC

According to the network architecture of Mantle Network, let us first briefly explain the operating process of its system:

1. When a user initiates a transaction or executes a contract on the L2 network, the transaction request will be sent to the sequencer, which will sort and package the transaction request into blocks according to certain rules.

2. Each block has a unique identifier, called the state root, which represents the state of the L2 network after the execution of the block. The latest state root will be submitted to the multi-party computation (MPC) node for verification. The MPC node uses the threshold signature (TTS) algorithm to sign the state root to confirm its correctness. After the state root obtains the MPC signature, it will be submitted to Ethereum It is stored in the Fraud Proof Contract (SCC) on Fang L1 for future status verification and withdrawal operations.

3. When users want to withdraw assets from the L2 network to the L1 network, they need to wait for a period of time, called the fraud proof window period. This is to prevent orderers or others from cheating or submitting wrong transactions on the L2 network. If someone discovers an incorrect transaction, they can challenge the SCC contract within the window period and provide evidence. If the challenge is successful, cheaters will be punished and incorrect transactions will be reversed.

4. In addition to the state root, each block also contains transaction-specific data, called CallData. While the state root is being verified, CallData will be compressed and submitted to a data layer on the L1 network, called Mantle DA, which is used to store transaction data on the L2 network. The data availability node of Mantle DA will sign the transaction data. , and put the signature certificate on the chain.

5. Other nodes can obtain transaction data from Mantle DA through the DTL service and verify and confirm it, which can enhance the security and reliability of the L2 network.

6. If users want to transfer assets from the L1 network to the L2 network, they need to complete it through the enqueue (call) method of the CTC (deposit contract). This method will put the user's assets into a queue, and then the sorter will sort them Move to L2 network.

7. When the user wants to transfer money from L2 to L1, it needs to go through the message mechanism and be executed after verification by L1.

The Mantle system also has other contracts and roles used to implement different functions, such as verifying status, managing permissions, upgrading the system, etc. Moreover, its key operational roles are controlled by a multi-signature wallet, preventing single points of failure or malicious operations.

By comparing the operating principles of OP Rollup and Mantle, we can find that Mantle has carried out a series of innovations and optimizations on the basis of OP Rollup technology, mainly including the following aspects:

1) Modular design significantly reduces transaction costs

Mantle adopts a modular network design and combines Optimistic Rollup with an independent data availability layer, which avoids the high Calldata cost of submitting all transaction data to Ethereum. (With the growth of transaction volume, this part of the fee can reach 80-95% of the total fee, which seriously restricts the cost efficiency of Rollups.)

Mantle's modular design handles the four key functions of the blockchain on different layers, rather than on a single network layer like most single blockchains. These four functions are:

▪ Transaction execution: performed on Mantle's EVM-compatible execution settlement layer, Mantle's sequencer generates blocks on the L2 execution layer and submits state root data to the main blockchain.

▪ Consensus and settlement: The Ethereum L1 network is responsible.

▪ Data Availability: Enabled with the help of EigenDA technology, a data availability layer built on top of EigenLayer to store callback data that would normally be broadcast to L1.

▪ Data acquisition: other nodes obtain transaction data from Mantle DA through DTL service, and verify and confirm it.

The figure below shows an example of a modular chain design.

Image Source: Modular Chain Design: Celestia Docs

The modular design also makes it easier for Mantle Network to access new technologies, such as the consensus mechanism can be replaced by zk-Rollup or zkEVM. At the same time, Mantle's modular architecture can significantly reduce transaction costs compared to the base layer. At the same time, due to the advantages of layering, it also improves the efficiency of the network, and through Optimistic Rollup, it also reduces the total load on the nodes.

2) EigenLayer achieves high performance data availability

Mantle uses EigenLayer as a decentralized data availability layer solution. EigenLayer allows Ethereum verification nodes to participate in data availability guarantees by re-mortgaging ETH. The Mantle data availability layer is a data layer supported by EigenDA. It can store and transmit transaction data on the Mantle execution layer, which allows Mantle to inherit Ethereum. security without publishing all data to L1. At the same time, EigenLayer also provides high throughput at the level of 1TB per second. Compared with other L2 networks that only rely on centralized storage, EigenLayer's technical design significantly enhances Mantle's data availability and anti-censorship capabilities.

EigenLayer provides Mantle with highly secure and high-performance data availability support and is one of the key technological innovations of the Mantle network. This also gives Mantle a clear competitive advantage in terms of scalability and decentralization.

3) Multi-party calculation mechanism shortens fraud proof time

The Mantle network uses the multi-party computation (MPC) protocol, which is its key technological innovation to accelerate fraud proof and increase transaction speed. Mantle's verification node network adopts a threshold signature (TSS)-based multi-party computing mechanism, which enables a group of verification nodes to quickly reach a consensus on transactions on Layer 2, generate state root information with multi-signatures, and then submit it to Ethereum. Compared with directly submitting transaction batches to Ethereum, this multi-party pre-verification method can greatly reduce the need for fraud proofs and shorten the proof time to 1-2 days. Although multi-party calculation is not as reliable as zero-knowledge proof, the node pledge and penalty mechanism can ensure a certain degree of security while balancing costs. Overall, Mantle's multi-party computing protocol mechanism helps it achieve a better balance between transaction speed and security, and is one of the key innovations for its high throughput and low latency.

4) Decentralized sorter eliminates centralization risk

Decentralization of the sequencer is achieved, providing secure and trustless block production. The sequencer is the role in the L2 solution responsible for collecting transactions, calculating state and generating blocks, which is crucial to the security of the network. In traditional Rollup schemes, the sequencer is usually a single centralized node, which is vulnerable to failure, manipulation, or censorship. Mantle replaces the centralized sorter with a permissionless sorter cluster, which brings the following benefits:

▪ Improves network availability, eliminates the risk of single point of failure, and ensures continuous operation of the network.

▪ Improves the consensus reliability of the network, prevents manipulation or censorship by the sequencer, and ensures fairness and transparency in transactions.

▪ Improves the incentive compatibility of the network and drives the compliant behavior of the sequencer through the reward mechanism, ensuring the long-term sustainability of the network. In contrast, centralized sequencers face a public goods dilemma.

▪ The decentralized sorter itself improves attack resistance, and its trustless consensus enhances security. This is also an important step in the evolution towards complete decentralization.

To sum up, the decentralized sorter is one of the obvious advantages of Mantle over traditional Rollup. It eliminates centralization risks and provides more efficient, reliable and secure block generation. This makes the Mantle network more robust and better protects the rights and interests of users.

3.3. Project Network Node

Four node roles are currently defined in the Mantle Network, namely sorting nodes, threshold signature scheme (TSS) nodes, Rollup verification/replica nodes, and data availability (DA) nodes. They each have different responsibilities:

1) Sequencer:

The sequencer is the role responsible for receiving and recording transactions sent by users on the L2 network, and packaging the transactions into blocks. The sequencer is also responsible for rolling up the transactions in the block, generating a batch containing the execution state root, and submitting the batch to the L1 network. The orderer also needs to broadcast block data to the entire network (L1 and L2). In the initial stage of Mantle Network, the sorter is operated by the Mantle core team and is a centralized node. However, in the development roadmap of Mantle Network, the sorter will gradually achieve decentralization, providing opportunities for other nodes to participate.

2) Threshold Signature Scheme (TSS) nodes:

The TSS node is the role responsible for "signing" the batches generated by the sequencer so that they can be sent to the L1 network. The TSS node needs to verify the state root generated by the sequencer to determine its correctness. The state root must be signed by the TSS node before it can be sent to Ethereum for recording. In the initial stage of the Mantle Network, TSS nodes are operated by a group of reputable institutions, but will eventually be voted for without permission through the governance mechanism of the Mantle Network.

3) Rollup validator/replica node:

The Rollup validator/replica node is the role responsible for synchronizing Rollup data from the trusted sequencer of the Mantle network and validating the submitted state root on the L2 network. If validator/replica nodes discover invalid state data, they can issue fraud proofs to reverse erroneous transactions. Validator/replica nodes are also responsible for providing Rollup data to users.

4) Data Availability (DA) Node:

The DA node is responsible for storing and transmitting transaction data on the Mantle network and providing data availability services. DA nodes use EigenLayer as the data availability layer. It is a protocol based on ETH remortgage, which can ensure the security and efficiency of Mantle's data availability layer. DA nodes do not need to publish data to the L1 network, but to EigenDA secured by re-mortgaged ETH. Doing so can greatly improve throughput and scalability, and allow new types of DApps to be built.

3.4. Project Ecosystem

The Mantle Network ecosystem is mainly reflected in the ecosystem incentives, ecosystem applications and its planning in the LSD field.

1) Ecosystem incentives

Mantle has strong ecological assets, including more than 2 billion US dollars in funds including the BitDAO treasury, and a large user base, which has laid a solid foundation for the development of the Mantle ecosystem. At the same time, according to the latest news on August 28, the Mantle Network governance page shows that the Mantle community has recently launched a proposal to use Mantle Treasury to promote the development of the ecosystem, and plans to allocate US$238 million to promote the development of the ecosystem. The specific contents include: providing applications with Liquidity support of up to US$160 million, providing up to US$60 million in seed liquidity for RWA-backed stablecoins, and providing liquidity support of up to approximately US$18 million for third-party cross-chain bridges.

At the same time, the special relationship between Mantle Network and Bybit will effectively promote high-quality projects in the Mantle ecosystem to gain a broader user base and liquidity. As one of the world's entry-level cryptocurrency trading platforms, Bybit has a large user base. Excellent projects in the Mantle ecosystem have the opportunity to be discovered by more investors through Bybit's recommendations and listed for trading on the platform. Higher liquidity and wider investor recognition for the project will be beneficial to its long-term development, and a prosperous ecosystem will further enhance the value of the Mantle network. It is foreseeable that projects and assets in the Mantle ecosystem will benefit greatly from Bybit's traffic and resource advantages. This win-win situation will also continue to attract more high-quality projects to join Mantle.

These initiatives demonstrate that Mantle Network will rely on its strong treasury resources to vigorously support the prosperity and development of the ecosystem. Through liquidity incentives and ecological funds, Mantle will attract more high-quality applications to join its network and promote the formation of a virtuous cycle.

2) Ecological application

Mantle Network has built a rich ecosystem, currently citing 119 projects on its ecosystem page, a few of which are still in the testnet stage. In terms of track breakdown, project parties and developers mainly focus on three parts: 38 DeFi categories, 27 infrastructure categories, 25 GameFi categories, and the rest are other categories, such as social networking, entertainment, tools, etc. The following are some representative projects in the Mantle Network ecosystem:

A. DEFI track

iZUMi Finance

iZUMi Finance is a multi-chain DeFi protocol that provides one-stop liquidity services (LaaS). Its philosophy is that every token should have access to better on-chain liquidity in an efficient and durable manner.

UMi currently launches three on-chain liquidity products: LiquidBox, iZiSwap and iUSD.

iUSD is a USD-denominated convertible bond launched by iZUMi, which uses transparent on-chain funds managed by smart contracts and multi-signature wallets as excess collateral to support the value of iUSD.

FusionX

FusionX is a decentralized trading protocol designed to provide safe and reliable trading services for Mantle Network. This project was launched in 2022 by a senior blockchain team and is one of the earlier projects to join the Mantle ecosystem. FusionX adopts the AMM model, and users can perform liquidity mining, trading, lending and other operations. At the same time, it supports a variety of trading pairs, including ETH/WETH, MATIC and other ERC20 tokens, to provide users with liquidity. The characteristics of the project are: The efficient on-chain order book system can ensure the immediacy of transactions.

 Symbiosis

Symbiosis is a cross-chain AMM DEX that brings together liquidity from different networks, including L1 and L2, EVM and non-EVM. Through Symbiosis, users can easily exchange any token between different networks. Symbiosis issued mUSD, an algorithmic stablecoin collateralized by Mantle ecological assets. This stablecoin can be exchanged for other assets in the Mantle ecosystem. A dynamic interest rate mechanism is adopted between mUSD and Mantle ecological assets to stabilize the price of mUSD.

B. Infrastructure

OwnLayer

EigenLayer is an Ethereum-based protocol that introduces a new cryptoeconomic security primitive called restaking. Rehypothecation allows ETH stakers in the consensus layer to choose to verify new software modules built on the Ethereum ecosystem, thus extending cryptoeconomic security (WJB has an in-depth research report on EigenLayer, interested readers can read it on their own). The link is as follows:

Pyth Network

Pyth Network is an oracle on the blockchain that can publish financial market data to multiple blockchains with high accuracy and low latency. Pyth Network's data comes from more than 80 primary data providers, including some of the world's largest exchanges and market makers, such as Jane Street, CBOE, Binance, OKX and Bybit. At the same time, it provides price data for a variety of different asset classes, such as U.S. stocks, commodities, and cryptocurrencies. Each price data is aggregated from prices from multiple data providers and can be updated multiple times per second. .

Biconomy

Biconomy is an open decentralized blockchain bridging platform, its main functions include:

Cross-chain asset transfer: Support safe and efficient digital asset transfer between different public chains, such as ETH, BTC, etc.

DApp interoperability: Allow DApp to access resources on other multi-chains, such as contracts, data, accounts, etc., to achieve true cross-chain interoperability.

Develop contracts: Provide a contract library for cross-chain interaction, developers can easily add cross-chain capabilities to their DApps.

C. Gamefi

Roboworld

Roboworld is a free-to-play card game where players collect and trade unique robots as NFTs and use them to battle opponents. Players must strategically select and use cards featuring bots to outwit their opponents and emerge victorious.

Chesslers

Chesslers is a Web3-based gaming platform that allows users to play chess and earn rewards. Chesslers is based on their staking protocol and can implement Web3 economic models on existing Web2 games. Users can bet and play high-quality skill-based games with real money or Chesslers tokens.

Age of Zalmoxis

Age of Zalmoxis is a game that combines historical authenticity, a compelling story, and mythological elements inspired by the legendary kingdom of Dacia (modern-day Romania). It is a third-person massively multiplayer online role-playing game (MMORPG) with NFT and GameFi mechanisms. It is based on the historical background of the ancient Dacian kingdom, which successfully resisted the invasion of the Roman Empire until it was finally conquered by Emperor Trajan in two bloody wars.

What needs special attention to the Mantle Network chain game ecology is that Mantle, as a high-performance Layer 2 network, can provide the necessary high throughput and low gas costs for chain games, which is crucial to realizing the interconnected blockchain game vision. . Mantle inherited rich game ecological resources from BitDAO, including projects such as Game7 and HyperPlay, which laid the foundation for Mantle to attract game users and developers. Game7 provides many valuable tools and resources for blockchain game developers, such as web3.unreal plug-ins, etc., which help developers build blockchain games more conveniently. HyperPlay serves as a blockchain game store and asset exchange platform. Also helping to promote seamless in-game asset circulation, the Mantle ecosystem has gathered a large number of game projects and is still growing rapidly, which shows its huge potential in the gaming field.

We can find that Mantle provides strong support for blockchain games in both technical and ecological aspects, and is expected to promote blockchain games towards large-scale applications.

Overall, the Mantle Network ecosystem has obvious advantages and disadvantages.

Specifically, the advantages are reflected in:

▪ The total number of Mantle ecological projects has reached 100+, which is comparable to other leading L2 networks.

▪ The project covers multiple fields such as games, DeFi, and infrastructure, and the ecosystem is constantly growing.

▪ There are some unique application scenarios, such as direct calculation, etc.

▪ The ecological assets are strong and there are a series of incentive plans.

▪ Good user experience, especially suitable for the development of chain game ecology

The main disadvantages are:

▪ Compared with other L2s, Mantle has a shorter development time and its ecological construction is still at an early stage.

▪ Mainstream protocols such as DAPPS on Ethereum have not yet been officially connected to the Mantle ecosystem.

▪ Team background and financing scale are not as obvious as some L2 pioneers.

▪ In addition to the DEFI category, the number of applications in other fields is still relatively limited.

▪ User base and TVL scale need to be improved.

Generally speaking, the number of Mantle ecological projects has reached a certain scale, but it is still in its early stages, and the degree of mainstream resource accumulation remains to be seen.

3) Mantle Network's planning in the field of LSD

From the official website planning and network architecture of Mantle Network, we can know that Mantle Network's LSD ecosystem is about to be launched and occupies an important position in its network architecture.

It can be seen from the Mantle vault that Mantle has a reserve of more than 220,000 ETH as its financial strength in the LSD field. The network is expected to carry out strategic cooperation with major top LSD protocols to jointly promote the development and application of LSD solutions based on the Mantle network, specifically:

A. Release Mantle LSD

Mantle plans to release a liquid ETH deposit protocol called Mantle LSD, which will be a decentralized protocol based on the Ethereum mainnet. Users can deposit ETH into the protocol to obtain equivalent mntETH tokens and earn mortgage income. This model leverages the strengths of the Mantle ecosystem, including its large initial deposit size and liquidity, as well as mntETH's diverse usage scenarios within the Mantle network.

B. Innovative mntETH utilization method

mntETH can be used directly in the Mantle network, which will greatly enhance the usage scenarios of mntETH and enhance its stickiness in the Mantle ecosystem. Mantle LSD's operating model can make maximum use of Mantle's established community, governance structure, brand influence and other resources, thereby reducing operating costs and risks.

C. Efficient Overall Governance

Mantle LSD will operate under Mantle's overall governance framework to ensure its long-term competitiveness and sustainability. At the same time, the simple system architecture of Mantle LSD will reduce the risk of complexity, making it easy to be accessed and compatible with other applications and ecosystems.

D. Strategic cooperation and DAO construction

In addition to the issuance of mntETH, Mantle will also carry out strategic cooperation with a number of top DeFi protocols to form a strong ecological synergy and jointly promote the development and application of LSD solutions based on the Mantle network. For example, Mantle has reached cooperation with Lido Finance to build the stETH ecosystem on the Mantle network. Mantle is also considering cooperation with protocols such as Pendle and StakeWise, which can not only create synergistic network effects but also optimize capital usage efficiency. In addition, Mantle is also exploring income options such as direct mortgage, and proposes to establish an economic committee as a sub-DAO to improve asset management efficiency.

From these aspects, we can see that Mantle's planning in the LSD field is systematic, innovative and efficient. It not only enriches Mantle's DeFi ecosystem, but also brings more unique user stickiness and value capture capabilities to the Mantle network. Compared with other L2 solutions, Mantle has significant advantages in this regard, which will strongly promote the rapid growth and cross-chain interconnection of the Mantle network.

3.5. Project Data

3.6.1. Project related data

• Token related data

According to data from Coingecko, the native token of the Mantle Network network is MNT. As of September 2, 2023, the price of MNT was US$0.45, with a circulating market value of US$1.454 billion, ranking 32nd among all cryptocurrencies. From the perspective of trading volume, MNT’s main liquidity comes from Bybit, a centralized exchange with strong financial strength behind it. On other mainstream exchanges, MNT’s trading volume is not high. Currently, MNT is not listed on any major mainstream exchange. listing, which may impact its liquidity and exposure. In addition, according to on-chain data, the current number of addresses held by MNT is approximately 163,406.

Taken together, the liquidity of MNT tokens is still highly dependent on the Bybit exchange. The value transfer channels in external mainstream exchanges and blockchain communities need to be further expanded. The number of currency holding addresses also has room for growth. With the ecological With the gradual enrichment of the system, the external liquidity and currency holding distribution of MNT are expected to be more balanced.

• L2 lock data

According to L2Beat statistics, as of September 2, 2023, the total locked value of Mantle Network is about 88.79 million US dollars, ranking ninth among all Layer 2 networks, accounting for 0.94% of the total market share.

From the perspective of TVL scale, Mantle Network lags behind the current top projects in the L2 field, such as Optimism, Arbitrum, etc. This is mainly due to the fact that Mantle Network, as an emerging L2 solution, its main network is still in the initial stage of operation.

As the Mantle ecosystem gradually enriches and the user base expands, its TVL scale is also expected to continue to grow. Proper incentive mechanism design and user cultivation will also help Mantle Network further enhance its influence and competitiveness in the L2 field.

3.6.2. Social Media Data

As of September 2, 2023, Mantle Network has performed well on social media platforms, showing that the project is very popular. Currently, the main channels of the project are Twitter, Discord, Telegram, and Medium. At present, Mantle's Discrod account has attracted nearly 320,000 followers, and the number of daily online users exceeds 9,000, making it one of the most popular channels. At the same time, Twitter updates and interactions are frequent. The following is the specific data for each platform:

4. Analysis of Token Economic Model

4.1.1. Token Model

The Mantle ecosystem and $MNT token are currently undergoing a governance approval process to determine key aspects including token addresses, token design and initial token distribution. This process involves key proposals and discussions, such as the BIP-21 merger proposal and the MIP-22 token design proposal.

1. BIP-21 Consolidated Proposal Highlights

▪ Proposed a "one brand, one token" principle to merge the brands and tokens of BitDAO and Mantle into Mantle to simplify the structure and communication of the ecosystem.

▪ Authorized a token swap program to convert all holders' $BIT tokens at a fixed rate to new Mantle tokens, which will have more advanced designs and features to support Mantle's products and governance .

▪ Simplified the token economic model, accelerated all BIP-20 contributions and lock-up plans issued by BitDAO, making the circulation supply of Mantle tokens clearer and more predictable.

▪ Existing governance and resource management processes are retained, and Mantle token holders can still vote on matters such as the direction of the ecosystem, budget, treasury, and more.

▪ Does not affect existing initiatives such as sub-DAO types, communities, and product categories, which can still independently determine their own brand, governance, mission, and strategy.

2) Key points of MIP-22 token design proposal

▪ Designed a new Mantle token, $MNT, which should have upgradeability and minting features similar to $ARB and $OP tokens, to support Mantle's products and governance.

▪ Determined a token conversion plan to convert all holders' $BIT tokens into $MNT tokens at a ratio of 1:1, providing multiple conversion channels and flexible conversion periods.

▪ A temporary conversion library has been established to support the token creation and conversion process. Received $BIT tokens will be destroyed and sent $MNT tokens will maintain a 1:1 ratio.

▪ Without changing existing governance and resource management processes, $MNT token holders can still vote on ecosystem direction, budget, treasury, etc.

▪ The Mantle core contributor team will be empowered to determine the best timing and sequence for $BIT token delisting, $MNT token listing, conversion channel opening, and Mantle network mainnet.

4.1.2. Total amount and distribution of tokens

1) Total supply of MNT tokens

MNT is the utility and governance token of the Mantle ecosystem. MNT holders can vote to participate in important decisions of the ecosystem, such as treasury management, protocol parameters, product direction, etc. In order to simplify the token economic model, MNT holders passed the MIP-23 proposal to halve the number of MNT tokens in the treasury from 6.05 billion to 3.05 billion. At the same time, the proposal keeps the circulating supply of MNT unchanged at 3.17 billion and reduces the fully diluted supply from 9.2 billion to 6.2 billion. In this way, the proportion of tokens in the treasury dropped from 65.6% to 49%, and the proportion of circulating supply increased from 34.4% to 51%. This change is intended to increase the demand and scarcity of MNT, thereby enhancing its value.

2) Token Economics of BIT

On July 15, 2021, the $BIT token was launched with a maximum supply of 10 billion tokens (no inflation), which was later changed to 6.2 billion.

After the MIP-22 vote is passed, it will be converted into $MNT on a 1:1 basis.

3) Token Distribution

The distribution of $MNT tokens in Mantle's treasury needs to follow Mantle's governance process. The budget, fund raising and allocation process follows strict procedures, such as the BIP-19 Mantle Network Budget. As of August 2023, there has been no formal discussion of macro goals or limits for $MNT token distribution. However, a few main categories are expected:

▪ User Incentives: Prioritize driving user adoption of Mantle products through the implementation of multiple strategies such as multi-season achievements, quests, and other incentive programs. Target metrics for user adoption include daily active users, total transaction and protocol fees, total value locked (TVL) and other relevant product adoption metrics. These incentives are designed to attract and retain users of the Mantle ecosystem.

▪ Technology Partner Incentives: This category focuses on incentivizing decentralized applications, infrastructure service providers and core protocol technology partners who contribute to the growth and development of the Mantle ecosystem. By providing incentives for these partners, Mantle aims to foster collaboration and partnership within the ecosystem, improving overall ecosystem performance and scalability.

▪ Core Contributor Team and Advisors: This category is also required to follow the same budget proposal process, ensuring transparency and accountability for the allocation of resources to teams and advisors that actively contribute to the project's success.

▪ Other Opportunities: This category includes some of the opportunities that may arise, such as acquisitions, token swaps, treasury sales, and other transactions. Each opportunity will be evaluated on a case-by-case basis, considering their potential benefit to the Mantle ecosystem and alignment with project goals.

▪ Burn: MNT tokens include a burn feature that allows removal of MNT tokens from circulation and total supply analysis. The destruction of MNT tokens from the treasury is determined through the Mantle governance process.

4.1.3. Token Value Capture

The value of the MNT token comes from its utility and governance in the Mantle ecosystem.

1. As a utility token, MNT can be used to pay gas fees in the Mantle network and serve as a collateral asset for node operators. These functions increase the demand and scarcity of MNT, thus increasing its value. In the long run, when the Mantle ecosystem develops the LSD track or even the Restaking business, $MNT can also be used alone or paired with LP as collateral.

2. As a governance token, MNT gives holders the right to vote on decisions made in the Mantle ecosystem. These decisions include treasury management, protocol parameters, product direction, etc. These functions increase MNT's influence and participation, thereby enhancing its value.

4.1.4. Token core demand side

1. Mantle users: They need to use MNT to pay gas fees in the network and participate in network governance.

2. Mantle network node operator: an individual or organization that provides infrastructure support for the Mantle network, such as verifiers, storers, calculators, etc. They need to use MNT to stake to become a node and receive network rewards and fee income.

3. Mantle Ecological Developers: Those who carry out ecological development on Mantle, they need to use MNT to obtain ecosystem incentives and support, and develop DApps on the chain. As developer incentives, the demand for MNT will grow with developers.

4. Of course, the LSD platform already under planning will also use MNT as the main LP pledge token.

5. Industry space and potential

5.1. Industry Overview

5.1.1. Project Classification

Mantle Network belongs to the project category of Layer 2 scaling solutions, which aims to solve the problems of congestion, high gas fees and inefficient transaction speeds of the Ethereum network. Broken down, L2 expansion solutions usually involve Optimistic Rollup, zk-Rollup, Plasma, State Channel and other technologies. Currently, the mainstream L2 expansion solutions are mainly Optimistic Rollup and zk-Rollup.

Mantle Network is an L2 solution based on Optimistic Rollup.

5.1.2. Market Size

The market size of L2 expansion solutions can be measured from the following dimensions:

1) Size of the Ethereum network

The Ethereum network is currently the largest public chain platform, with more than 1.6 million active addresses, more than 62 million smart contracts, more than 4,200 DApps, and a market value of nearly $200 billion. The Ethereum network is the foundation and goal of L2 expansion solutions. Its scale and activity determine the demand and potential of L2 expansion solutions, providing huge potential user demand for L2 expansion.

2) L2 scales solution

Currently, there are multiple L2 extension solutions in operation or development in the market, each of which adopts different technical methods. According to L2Beat data, as of September 2, 2023, the total locked value (TVL) of L2 expansion solutions has reached US$9.48 billion, showing strong development momentum and user demand. Among them, Arbitrum is currently the most popular L2 expansion solution, with a TVL share of 54.99%, followed by Optimism, with a share of 25.21%, and zkSync, with a share of 4.3%. It is worth noting that in the past six months, despite the overall market downturn, the total TVL of L2 expansion solutions has increased nearly 2 times, demonstrating the advantages and potential of L2 expansion solutions in improving user experience and reducing transaction costs. This provides a market opportunity for projects such as the Mantle Network to exploit.

5.1.3. Industry development background

L2 is a scaling solution built on top of Ethereum L1, aiming to improve the speed and efficiency of transactions and reduce costs and friction for users. The emergence of L2 is to solve existing problems and create value, not to compete with or replace L1. However, from a business point of view, L2 seems to be more profitable and more promising.

1) From a business model perspective

L2 can provide equivalent functions to the Ethereum main network, but with lower gas fees and faster transactions, which can attract dapps and users to access it, increase on-chain transactions, and earn revenue from it. L2 only needs to pay the gas fee for regularly packaged transactions to L1 to obtain the difference between income and expenditure. Its business model has significant advantages.

At the same time, L2’s R&D and operating costs are also lower. It can reuse existing solutions such as Optimistic Rollup, without the need to independently develop a consensus mechanism, and the threshold for launching an L2 network is lower.

In contrast, building a competitive L1 requires a huge investment of time and resources.

① First of all, it is necessary to develop a consensus mechanism that the market can buy, which requires a lot of R&D resources, time and accumulation;

② Secondly, it is necessary to attract enough nodes to participate in the network to ensure the security and decentralization of the network;

③ Finally, it is necessary to construct some differentiated narratives, such as focusing on privacy or security.

At the same time, in a bear market environment, it is more difficult to raise funds for VC storytelling, and it is even more difficult for retail investors to buy in. To build a new L1 from the primary market to the secondary market will inevitably experience twists and turns. Instead of building a unique public chain from 0 to 1, which involves a large investment and slow results, it is better to parasitize in Ethereum's L2, which requires a small investment and relatively fast results.

2) From the flow point of view

What is more important is the "traffic business", that is, where the users come from. L2 can be started from existing users in its own product ecosystem or the Ethereum ecosystem, and can be expanded to more areas through product integration, user migration, cooperation scenarios, etc. The entry of centralized exchanges or large wallets into L2 can bring natural user traffic. But no matter what, when projects and capital choose to do L2, most of them start from their own product ecosystem or existing users in the Ethereum ecosystem, and then expand to more cooperation scenarios (such as Polygon's actions in the Web2 field). In contrast, L1 needs to build a user base from scratch, and faces competition with hundreds of other public chains.

3) From the external competitive landscape

The L1 track is already very crowded and intense. According to data from DeFiLlama, there are currently nearly 200 public chains on the market, of which about 190 belong to L1, which means that there is excessive competition in the L1 market. Among these public chains, only a few can occupy the minds and market share of users. With the black swan events and the withdrawal of capital in recent years, many public chains that were once popular have become active and profitable among all types of users. Indicators such as composition and trading volume have lost their light on the dashboard. For most L1s, the concept is still there, but it is not full of life. Choosing to jump into such a dead sea is not a wise choice from a business perspective.

In contrast, the L2 track is relatively loose and favorable, with less competitive pressure, lower market share concentration, and diverse technical routes. Specifically, there are currently 26 L2 projects that L2Beat can count, and the competition intensity is about one-seventh of that of L1. The top two projects in L2 market share are Arbitrum and Optimism, with market shares of 55% and 25%, the market share of other L2 projects is relatively fragmented, and there is still a chance to become a top project. At the same time, L2 adopts a variety of technical routes, including Optimistic Rollup, ZK-Rollup, etc., which provides users with more choices. It also provides more space for the development of L2.


With the completion of the technical upgrade of Ethereum this year and several subsequent upgrades, the narrative around performance will exist for a long time, and L2s still have a long development window; Not much, L2 also has the advantage of being constantly noticed in an environment where attention and funds are scarce. Therefore, judging from the competitive landscape and external environment, L2 seems to be a profitable business at present.

5.2. Track layout

5.2.1. Competitive Landscape

The current L2 market is at a critical stage of intense competition. As the Cancun upgrade approaches, the L2 network has become the hottest narrative track in the second half of 2023. Since July, the L2 layer TVL has often remained above 10 billion US dollars. Many established public chains have announced their shift to L2 or launched their own L2 projects and received financing support. At the same time, native L2 networks are also promoting technological innovation. According to the encrypted data platform Rootdata, there are 77 L2-related network infrastructures included. Currently, the L2 market is dominated by two mainstream expansion solutions: Optimistic Rollup and zkRollup.

1. Optimistic Rollup type

Optimistic Rollup is currently the most mature technology route in L2 networks. Its representative networks include Arbitrum, Optimism, Metis, Boba and Mantle Network.

2. zkRollup family

zkRollup is another potential technology route in the Layer 2 network. Its representative networks include six major networks such as zkSync, StarkNet, Polygon zkEVM, Linea, Scroll and Taiko.

3. Simple comparison

5.2.2. Competing projects

The Mantle Network project faces fierce competition from other L2 expansion solution projects. The core competition factors are mainly technical solution advantages, ecological prosperity and user experience. Here are some major competing projects:

1) Decision:

It is a Layer 2 expansion solution based on Arbitrum Rollup (improved Optimistic Rollup) technology and will be launched on the mainnet in August 2021. Arbitrum's total locked-up value ranks first among all L2s, and its ecological projects are also the most abundant, with 559 projects already connected. The Arbitrum ecology currently mainly includes three sub-chains: Arbitrum One is the main network; Arbitrum Nova is for high-frequency applications; Arbitrum Orbit is a toolkit for building L3.

Arbitrum’s advantages: Arbitrum’s ecological scale ranks first among all major Layer 2s, with more than 550 ecological projects. Arbitrum Rollup adopts a multi-round block generation mechanism, which can provide higher block generation efficiency and Lower Gas costs. At the same time, Arbitrum has its own Arbitrum virtual machine, which supports richer programming languages.

Disadvantages of Arbitrum: Compared with Optimistic Rollup, Arbitrum's transaction confirmation delay is higher. At the same time, Arbitrum Nova uses the AnyTrust framework, which is not as secure as Arbitrum One's direct use of Ethereum's security.

2) Optimism：

Optimism is an Ethereum Layer 2 expansion solution based on Optimistic Rollup. It will be launched on the mainnet in August 2021. Optimism's goal is to provide an interactive experience that is completely consistent with Ethereum, but the transaction costs are only a small proportion of those on a layer-1 network. Optimism is currently the second highest TVL project in the L2 scaling solutions category.

Advantages of Optimism: Optimism has launched the open source modular toolkit OP Stack, allowing developers to use the OP Stack toolkit to assemble a customized Layer 2 network according to their own needs. Many well-known blockchain projects have launched their own Layer 2 networks based on OP Stack, which together form the Optimism super chain kingdom, which injects richer application scenarios and network effects into the Optimism ecosystem. In addition, Optimism has significantly reduced transaction fees and improved performance through optimization measures such as Bedrock upgrades. Its gas fee has become one of the lowest Ethereum L2.

Disadvantages of Optimism: Compared with Arbitrum, the ecological prosperity on the Optimism chain is slightly inferior. At the same time, its transaction speed is about 1000 transactions per second. Compared with the Rollup network of zkRollup technology, there is still room for improvement.

3) zkSync：

zkSync is a well-known zk Rollup Layer 2 expansion solution, and its core network zkSync Era adopts zkEVM design. zkSync's total lock-up size reached 500 million US dollars, ranking third among all L2s. zkSync is switching from zkSNARK to zkSTARK proof system, which will improve the transaction efficiency of the network, and launched a community airdrop plan to motivate users.

Advantages of zkSync: Recently, zkSync launched the zkStack toolkit, based on which developers can build customized zkRollup series L2 and L3 (also known as hyperchain HyperChain). This helps expand the technical application scenarios of zkSync. At the same time, zkSync can take advantage of the compression feature of zero-knowledge proofs to pack more transactions into one proof without waiting for the challenge period. This increases transaction throughput and speed, while also ensuring security and correctness.

Disadvantages of zkSync: The zkSync ecosystem is still small and needs to be further expanded. At the same time, the recent airdrop incident also reflects that the project still needs to strengthen its community building. At the same time, the technical complexity of ZkSync is relatively high, and developers need to have a certain technical foundation to build applications on the ZkSync network.

4) Starknet

StarkNet is a zkRollup expansion network developed by StarkWare based on zkSTARK. The mainnet will be launched in November 2021. StarkNet is currently the second zkRollup network in TVL.

Advantages of StarkNet: Starknet is gradually achieving EVM compatibility with Ethereum through the kakarot and Warp projects. This is Starknet’s current research and development focus. At the same time, Starknet will also support developers to build application chains in the future, which can expand its usage scenarios.

Disadvantages of StarkNet: Since it is not yet compatible with EVM, Starknet's ecological prosperity is still weak. At the same time, StarkNet's technical complexity is relatively high, and developers need to have a certain technical foundation to build applications on the StarkNet network, which makes it less developer-friendly.

5) Polygon EVM

Polygon is a blockchain dedicated to increasing the scalability of Ethereum, and they achieve this by leveraging different solutions. Their flagship product is the Polygon PoS sidechain, which currently handles 2-3 million transactions per day across 300,000-400,000 addresses.

Advantages of Polygon EVM: Polygon not only provides its own Layer 2 network Polygon PoS and Polygon zkEVM, but also provides modular open source components Supernets for building customized Layer 2 and Layer 3 networks, enriching Polygon's technical route. At the same time, the recently released Polygon 2.0 further unifies different networks, updates the original token code to POL, and releases a new governance framework to form a multi-chain interoperable ecosystem, which enhances Polygon's network effect. In addition, Polygon has cooperated with many Web2 companies, has a large user base, and its ecological projects are also growing steadily.

Disadvantages of Polygon EVM: The Polygon ecology is still dominated by its own side chains and sub-chains, and its interoperability with the Ethereum main network is limited, and its governance mechanism also has room for improvement.

Overall, the advantages of Mantle Network compared with other L2 networks are mainly reflected in its modular design, strong BitDAO support, focus on data availability and focus on improving user experience, and has potential in the gaming field. The disadvantages are mainly reflected in the fact that it is a newcomer in the L2 field. Its core technologies such as modular architecture have yet to be verified in practice. Ecological construction is still in its early stages. It lacks DApps that have a firm foothold. There is uncertainty in long-term competitiveness.

6. Preliminary Value Assessment

6.1. Core Issues

**Which business cycle is the project in? Is it the mature stage, or the early and middle stages of development? **

Mantle Network is currently in the early to mid-stage of development. It is an emerging project founded in 2021 and has not yet formed a complete and mature ecosystem. The mainnet will only be launched in July 2023 and needs to undergo more testing and optimization to improve its stability and reliability. Although it already has some high-quality partners and applications, such as EigenLayer, Biconomy, etc., its user scale and market share are still relatively low, and it needs to attract more developers and users to join its platform to increase its influence. and competitiveness.

**Does the project have a solid competitive advantage? Where does this competitive advantage come from? **

Mantle has some potential differentiating advantages such as modular architecture, coupled with community support, it is expected to stand out from the competition. But on the whole, these advantages still need to go through product iteration and application testing, and facing strong competitors, there is no obvious competition barrier, and the operation effect after the main network needs to be observed.

**What are the main variables in the operation of the project? Is this factor easy to quantify and measure? **

Technical progress: The Mantle Network project needs to continuously develop and improve its technical solutions to improve network performance and security, and to fix possible loopholes or defects. Technical progress can be quantified and measured through change logs, code submissions, test results, etc. published by the project team.

Ecological development: The Mantle Network project needs to continuously expand its ecological partners and application scenarios to attract more users and funds into the L2 network and provide more diverse and high-yield on-chain activities. Ecological development can be quantified and measured by the number of DApps, TVL, transaction volume, number of users, etc.

Community active: The Mantle Network project needs to continuously motivate and reward its community members and partners to enhance the cohesion and influence of the community and provide support and feedback for the project's governance and decision-making. Community activity can be quantified and measured through social media followers, community members, voting participation rate, number of proposals, etc.

**What is the management and governance of the project? **

Mantle adopts a relatively flexible off-chain governance mechanism. Specifically, governance issues and proposals are first proposed and discussed in the forum by Mantle core team or community members. If the proposal gets enough attention and support, it will form a formal MIP proposal, which will be voted by MNT token holders on the chain. Once the MIP proposal is passed, Mantle's core development team and contributors will be responsible for implementing and controlling the progress of the project according to the content of the proposal. This governance mechanism is more flexible than the automatic execution of voting on the chain. It enables Mantle to adjust the execution progress according to the actual situation, instead of being led by a simple majority vote. But this also means that there is a certain centralization dependence in Mantle governance, and the core team plays a greater role in governance. This off-chain governance method is still an exploration in the field of decentralized autonomy, and its effect still needs to be observed for its practical application in the Mantle project.

6.2. Project Valuation Level

We valued Mantle Network by horizontally comparing the L2 valuation of the same track.

The valuation of smart contract public chains is a complex and difficult subject. DeFi protocols can use revenue multiples and other methods for valuation reference, while smart contract public chains are more similar to a country. It may be more appropriate to evaluate the current situation and potential of the public chain from the perspective of "comprehensive national strength."

The "comprehensive national strength indicator" of the public chain should consider data such as the number of active DAPPs, the number of active users, TVL, the value of total assets on the chain, the number of active developers, the number of transfers on the chain, the total value of transfers on the chain, etc., and through certain It is obtained through weighted processing, but there is currently no similar indicator.

Therefore, we focus on selecting indicators from four dimensions: assets, user volume, network activity, and developers to compare Mantle Network with other L2 competitors.

**1) Asset indicator: TVL. **The user's willingness to place valuable assets on a certain chain shows the user's comprehensive recognition of the security, availability, and investment value of the chain. We use circulating market value/TVL as the asset indicator (MTV) for horizontal comparison. The smaller the value of this indicator, the greater the number of on-chain assets corresponding to its unit circulating market value, and the lower the valuation.

**2) User indicators: **The number of active users, the number of active addresses and other indicators can reflect the user base and activity of the public chain. We choose the 30-day average number of daily active addresses to measure user scale, and compare the circulating market value with the number of daily active addresses, that is, market value/daily active addresses, as a comparison indicator. The lower the value of this indicator, the larger the number of users with the same market capitalization.

**3) Transaction activity indicator: **The activity of transactions on the chain is an important indicator to measure the activity of public chain users. Traditionally, activity has been measured using the dollar value of gas consumed per day, but this metric has certain limitations:

① High Gas prices will lead to reduced user activity, but this indicator does not reflect this.

② This indicator cannot distinguish between different types of transactions, such as transfer transactions, contract calls, etc.

In order to overcome the above limitations, we use two indicators: the dollar value of daily gas consumption and daily transaction volume to measure activity. Specifically, we converted the dollar value of Gas consumed in the last 30 days and the transaction volume in the past 30 days into adult data, and obtained two indicators that can be compared horizontally:

③ Market value/annualized Gas consumption amount: The smaller this indicator is, it means that the unit circulation market value of the chain can carry more business activity, and the lower the valuation will be.

④ Market value/annualized transaction volume: The smaller this indicator is, it means that the unit circulation market value of the chain can carry more transaction volume, and the valuation will be lower.

These two indicators can more comprehensively reflect the activity of transactions on the chain, and can effectively overcome the limitations of traditional indicators.

**4) Developer indicators: **Indicators such as the number of active developers and the number of verification contracts on the chain can reflect the developer ecosystem of the public chain. The number of active DApps is an important indicator for assessing the prosperity of a Layer 2 network, but there is currently a lack of reliable statistical data sources for active DApps. We can use the following methods to measure developer activity on the Layer 2 network:

① You can choose the average daily number of newly deployed contracts on the official browser as the criterion

② Calculate the indicator "circulating market value divided by the average daily number of newly deployed contracts" to reflect the developer activity level that a unit of market value can carry.

③ The smaller this indicator is, it means that more developers can be carried under the same market value, and the relative valuation is also lower.

By comparing this indicator with different Layer 2 networks, we can intuitively judge the ecological prosperity and valuation level of the network, thereby better assessing the development potential of Layer 2. This calculation method can provide a concise comparison of ecological activity under current conditions to compensate for the imperfections of direct DApp statistical data and more comprehensively reflect the network's developer profit margins.

In addition, before making the comparison, we also need to note that unlike other L2s that use ETH as a Gas token, the MNT token is regarded as the Gas token of the Mantle chain. This needs to be included when comparing with other L2 networks. Consider, then Mantle's valuation would be slightly lower based on this comparison method.

The results of horizontal data comparison are as follows:

We can clearly find that after the ecological merger between Mantle and BitDAO, the current valuation is obviously overestimated. Compared with the Layer 2 networks of other OP Rollup tracks, Mantle's ecosystem is still in an early stage, and all core indicators lag behind to a certain extent. However, 50% of Mantle's native token MNT is already in circulation, which supports its high valuation. .

Looking forward to the future, as the Mantle ecosystem continues to improve and prosper, its business foundation will gradually strengthen. At this time, if Mantle can maintain a moderate valuation level, it is expected to achieve greater growth in the OP Rollup track and break the current situation.

6.3. Project Risk

**Project development is still in its early stages: **Mantle Network only launched the mainnet alpha version in July 2023. Therefore, the technology and commercialization of emerging public chains are still in an early stage of development. Judging from the operating time of the main network, both network effects and technical stability still need to go through such a long test. Some key governance topics, such as staking mechanism design and zkEVM technical roadmap, are also up for discussion. As a new project, Mantle also needs to continue technical iterations and role expansion to attract users and the ecosystem, which requires the team to maintain efficient governance and development. To sum up, the development of the Mantle network is still relatively early, and key governance and technical aspects need to be improved. Uncertainties in this development process will become potential risks for the further development of Mantle.

Competitive risk: Facing a fierce Layer 2 competitive environment. As an emerging Layer 2 solution, an important risk Mantle Network faces in its future development is the increasingly fierce public chain competition. At present, there are many relatively mature projects in the leading position in the Layer 2 market, such as Arbitrum, Optimism, etc. These pioneers have strong technical strength and a large user base. At the same time, various new Layer 2 projects are constantly emerging, and these new projects are competing for users and market resources. Moreover, future upgrades of Ethereum will also enhance its own expansion capabilities. Facing such a fierce competitive environment, Mantle needs to continuously enhance its product strength through technological innovation in order to stand out from the competition, otherwise it may face the risk of losing users. To sum up, the increasingly fierce competition in public chains is one of the risks that Mantle Network needs Priority to pay attention to and deal with. How to stand out from the competition is a key consideration for the Mantle project team.

Negative impact of poor performance of BIT tokens on MNT. Mantle Network’s native token MNT is generated by converting BitDAO’s token BIT. The market performance of BIT tokens has been poor, falling from the ICO price of US$1.4 to the current price of about US$0.5. This continued downward price trend may have a negative impact on MNT. On the one hand, BIT holders may lack confidence in the expected value and prospects of MNT and are unwilling to actively participate in the ecological construction of MNT. On the other hand, external investors and users may also have doubts about the value and appreciation space of MNT due to the price history of BIT tokens. This is not conducive to the widespread recognition and liquidity of MNT. If MNT cannot effectively change this linkage expectation of BIT performance in the future, its own token demand and price may face certain downward pressure. This is a risk factor that Mantle Network needs to focus on guarding against in token design and operation.

**Technical security risks: **Mantle's current technical risks are mainly: 1) The current Mainnet Alpha version fraud proof is still under development; 2) The data availability layer is not online. Mantle plans to use fraud proofs to guarantee state correctness, but this feature is currently under development and the system allows invalid state roots. Furthermore, since the data is not stored on-chain but is maintained externally by the team, fraud may not be detected, even off-chain, and a user's funds may be stolen if a malicious user submits an invalid state root. At the same time, Mantle's data availability layer MantleDA is based on a forked version of EigenDA, but it has not yet been integrated into the EigenDA main network. Moreover, the slashing mechanism (Slashing) in MantleDA is currently disabled, and the fraud proof mechanism of data availability has not yet been activated. . Users will then be unable to access their funds. Additionally, if external data is tampered with, users' funds may be lost.

6.4. Thinking

From our overall analysis of Mantle Network, Mantle is an L2 solution with obvious advantages and disadvantages. Whether it can eventually become a mainstream L2 solution depends on whether it can fulfill its technical promises and build a sufficiently secure network. And efficient Rollup network. We need to continue to pay attention to Mantle's technological evolution path and the progress of its ecosystem construction in order to fully judge its future prospects. Mantle is working hard to develop new paths for the L2 network, and we also look forward to its positive contribution to the entire Ethereum ecosystem. Judging from its development plan, there are some short-term development opportunities that we can pay attention to:

**1) Introduced the Mantle Journey Incentive Program. **

Mantle Network provides users with a variety of ways to earn Mantle Journey (MJ) miles and redeem exclusive benefits in the Mantle ecosystem. Users can accumulate MJ miles by conducting transactions on the Mantle network, providing liquidity, participating in governance, and completing specific tasks. These miles can be used to mint unique Mantle Citizen NFTs, acquire NFT rare attributes, redeem ecosystem rewards, and more. The operation of Mantle Journey provides users with more incentives to participate in the construction of the Mantle ecosystem. It can effectively aggregate users, enhance user stickiness, and provide users with a monetization channel, which will help attract more users to join Mantle. From the perspective of project opportunities, Mantle Journey provides users with a new mechanism to obtain rewards. It opens up a new model of Web3 community construction and is worthy of learning from other public chains. This also reflects Mantle's community operation capabilities.

**2) Mantle Network is in a period of rapid growth, and there are multiple profit opportunities in its ecosystem. **

Mantle is actively building the LSD ecosystem and has reached cooperation with other innovative DeFi protocols. This provides users with multiple ways to earn income by participating in staking, trading, and investment portfolios. As the number of ecosystem protocols increases, users can focus on potential high-quality applications and choose to join their IDOs or provide liquidity at the right time to obtain higher returns. After the Mantle ecosystem reaches a relatively mature stage, its network effect will be further amplified. At that time, users can keep up with the ecological development trend, seize the emerging hot spots to participate, and obtain additional benefits.

7. References

Mantle Network project official website

BitDAO Economic Model

Mantle Network official Twitter

Mantle Network Official Discord

Mantle Network Official Medium

Mantle Network Official Proposal Center

Mantle Network official DOC

Mantle Network Token Information

Tokenterminal

L2beat