The New Mantle Token AMA Notes
The New Mantle Token AMA Notes
Note: BitDAO has announced that they will be converting tokens 1:1 instead of the initial 1:3.14 ratio. The notes have not been changed to reflect this on purpose, to keep the original.
Overview of the Proposal:
The Mantle token, $MNT, should have upgradability and minting functions
The one-way token conversion ratio should be 1 $BIT token to 3.14 $MNT tokens
A liquidity pool for $MNT-ETH should be created, utilizing the proceeds from the deconstructed $BIT-ETH pool
A temporary conversion treasury should be created to facilitate token conversion process
Mantle and Why a New Token Is Needed:
Main goal with building Mantle is to build a competitive, improved and unique Layer 2.
A key component is that a new token is needed, with a new smart contract, more functionality and more use-cases
Token needs to reflect the vision of the protocol itself, a Layer 2 product ecosystem, rather than an investment ecosystem (BitDAO)
Therefore $BIT cannot be used, since the tokenomics required for an investment DAO and an L2 are different.
The design needs to be similar to well-designed L2 tokens, like ARB and OP, where there is opportunity to create community incentives and give ownership of the ecosystem to tokenholders
Token Distribution:
The distribution of the token is very important, and Mantle needs to consider who should own the tokens, what is the right amount of tokens that holders and the treasury should have
Success of a L2 depends on its community, and tokenholders should be taken care of
So far, BIT token distribution has changed quite a bit: Bybit use to hold a large portion on their balance sheet, that was to be slowly fed into the treasury.
These holdings have been vested and have all been sent into the treasury already
Main goal right now is to separate Bybit and Mantle, and to show that this is not only a Bybit product for the Bybit community
Current plan is to do a conversion, where $BIT holders have the right to convert to $MNT
Conversion ratio is 1 $BIT to 3.14 $MNT
Initial fully diluted total supply will be 31.4B.
The plan is to burn many of these tokens, so that tokenholders end up owning a larger portion of the network
The decision of how much will be burned will be up to the community
Initial vision for BIT was that it was an experiment, with products developed internally and a community built, but the community and products did not tie well together with $BIT token
The vision for Mantle is to produce a more cohesive ecosystem, where better products are made, which would then improve the community, whom would make better investments
The general takeaway is that existing tokenholders will benefit off of the conversion, and more than 60% of the tokens are already in the treasury.
Bybit's contribution that was meant to be sent to the treasury over 4 years was already sent into the treasury and is not circulating.
Token Upgradability and The Mint Function:
According to the proposal, there will be a mint function to the new token.
This is to ensure that the token design is sustainable, and so that fees, validators and sequencers can be paid
There should not be much reason for this mint function, since the treasury is well-capitalized, and the general aim is to actually decrease supply over the next few years using buybacks and supply burns, rather than increase.
The mint function is similar to the mechanism being used by Arbitrum, except that Mantle has set the initial inflation percentage to 0
If inflation is to be changed, it would need to go through a two step governance process: one to increase the inflation numerator, and a second to call the mint function
If a mint function is called, the treasury (the DAO) would receive the tokens, since they are the ones that are approving the proposal. The new tokens would be used to pay for incentives, developers and ecosystem rewards.
An in-depth technical research report was completed as part of the proposal
This was used to analyse the features of existing L2 tokens (Boba, Metis, Optimism and Arbitrum) and to see what features that they have included would make sense for Mantle
Currently, $MNT will include a minimal feature set that enables L1-L2 sync between the tokens, while not overloading the token with functionality
Conversion:
There will be a completely new smart contract with a new oracle for the new ecosystem
Conversion is necessary because the MNT token will be used as the base gas token for the new L2, and therefore the contract needs to be upgradable
Original BIT token was designed to be a governance token, without upgradability, minting or burning
These functions are necessary for a token underlying an L2, which is why a complete contract migration is necessary.
MNT ticker was chosen despite a token already existing with the same ticker
Other options were considered, such as MNTL or MAN, but MNT was the ticker which clashed the least
Listing MNT on Exchanges:
Exchanges have their own constraints and considerations regarding listing and delisting.
Exchange has to support new listings, BIT is listed on a few exchanges, but some choose not to because a majority of the supply is held by Bybit
The new refresh and the change of MNT to be held by the community will make it favourable to get listed on new exchanges.
In regard to existing listings, exchanges will help users convert to the new token, especially Bybit, which has the highest trading volume for BIT.
The goal is to make it as seamless as possible and create as many channels as possible. Mantle will cover some fees as much as they can, so that token holders will not have to pay and will have plenty of time to convert.
Conversion Continued:
There will be a lengthy window where people can make their choice to convert from BIT to MNT
For months not weeks
It will be a fairly standard token swap contract, and should be open-ended
Gas fees will be addressed fully later, but the intent is to make it as seamless as possible
The conversion contract will be sent for audits soon and will be available to look at in a few weeks
The conversion will take place on L1, because Mantle wants to keep the native token where the on-chain governance currently is
Cross-chain governance can lead to risks
Since a lock model is used instead of a mint model, supply sync issues will be mitigated
If a mint and burn model were used, there could be risk conditions where the total supply could become out of sync (e.g. if there was a reorg)
Issuing all tokens on L1 and locking them up in the bridge contract before bridging over to the L2 ensures that they can keep the total supply and aggregate of the token accurate
Regarding gas, focus is to ensure that people do not pay high gas fees
There's a partnership with Bybit for the tokens that are sitting there, and the exchange will allow for a gasless conversion
Token conversions are very common, and can sometimes be complicated, if tokens have large presences in DeFi pools
BIT to MNT conversion is quite simple, since there's only one main Uniswap pool and the LP can be converted.
Temporary Conversion Treasury:
Since the token is new, it needs a place to be put to, to be accessible
MNT will be created and put in the TCT and then will get dispersed out to all BIT holders
MNT migrator will contain a bit of MNT funded from the treasury
Another reason the TCT is used is so that the Mantle treasury is untouched (without governance voting), and to ensure that the process is simple and clean
Timeline:
Expected timing is that the proposal and MNT token creation should be done in June
After token is created and dispersed, mainnet will launch
Strategically, exchange listings should be around mainnet launch, however, it depends on the exchanges and their discretion
Token Design:
Main focus with the token is to align incentives, and to make sure that the token is useful and there will be advantages to holding it (MNT will also be a gas token)
What has worked in the past are user incentives, such as airdrops (Arbitrum activity and TVL grew post-airdrop)
After initial adoption, they will be looking to airdrop users
Sybil prevention will be implemented, to ensure that real activity and actual users are incentivized
Additionally, technology partners will be incentivized, to ensure good infrastructure (bridges, liquidity and oracles)
An ecosystem fund will be available for teams and contributors to attract protocols
They will avoid never ending unlocks and dumping:
This often happens in other L1s, where initially a very low part of supply is unlocked
Mantle has already been bootstrapped by the DAO and most of the supply is held in the treasury, so there will be limited overhang