What is Mantle? (MNT)

Blockchain networks typically prioritize two out of three vital characteristics: security, decentralization, and scalability, a problem known as the blockchain trilemma. Ethereum has historically accomplished security and decentralization, but at the cost of scalability. The network is sometimes slow because of a block time hovering around 12 seconds and network congestion leading to both delays and high transaction fees. Multiple Ethereum-based layer 2 scaling solutions (L2s) have attempted to solve this third aspect of the blockchain dilemma. These include sidechains like Polygon and rollups like Optimism and Arbitrum.

Mantle Network is a rollup-based L2 that that uses a model like Optimism while adding a novel, flexible form of data availability (DA). This ensures that the ledger of the network is verifiable by any node, and it separates DA from the consensus layer, thus streamlining transaction processing and decreasing its cost. It communicates with the Ethereum mainnet through a smart contract that details the transactions and state of the L2 network.

The MNT token is an Ethereum-based asset used to pay transaction fees on the network and for community governance. It originated as BitDAO’s BIT token, before the project rebranded to fully focus on its L2 effort.

How was Mantle developed?

Mantle was originally developed by BitDAO, one of the largest decentralized organizations (DAOs) founded in 2021. Though structured as a DAO with an emphasis on community governance and guidance, much of BitDAO’s funding came from the Bybit centralized exchange. This support endowed BitDAO with a treasury from which to fund development—second in size (excluding its own tokens) only to the Ethereum Foundation’s treasury.

In May 2023, a BitDAO governance proposal passed with nearly 100% support. It took one of BitDAO’s community’s main ventures—a layer 2 scaling solution for Ethereum called “Mantle”, whose testnet launched only four months earlier—and made it the official new brand. BitDAO became Mantle, and the BIT token became MNT under the motto: “One brand, One token.” The Mantle mainnet was launched soon after that, in July.

The Mantle Economics Committee was formed in August 2023 to manage its treasury. Later that year, a Mantle-based liquid staking protocol (Mantle LSP) was launched, contending with the likes of Lido Finance and Rocket Pool. In early 2024, Mantle announced its Rewards Station, which allows users to lock MNT tokens to earn rewards. The announcement inspired a dramatic, short-term rally in MNT’s market valuation at the time.

How does Mantle work?

Mantle’s role as a layer 2 scaling solution is to make transactions faster, more affordable, and retain the security of its layer 1 chain (Ethereum). Its approach to this goal is three-fold, using: 1) an optimistic rollup, 2) a modular blockchain, and 3) a novel approach to data availability.

Optimistic rollup

Optimistic rollups (ORs) are layer 2 solutions built to scale Ethereum by batching many transactions together and publishing them on-chain. Therefore, they ultimately use the strong security of Ethereum as their base. L2s that use optimistic rollups include Arbitrum and Optimism. Similarly, Mantle’s protocol assumes the validity of batched transactions when it publishes them to layer 1 (L1) chain, and only through fraud proofs can invalid transactions be undone. If that occurs, then the submitter of the batch (called the Sequencer) gets its stake slashed—in other words, its locked tokens are confiscated.

Modular architecture

Though ORs have become a common way to scale, the other components of Mantle’s framework are more unique. Mantle’s modular architecture is vital to how it sets itself apart. Most ORs rely on Ethereum for all its functions. This means that consensus, execution, and other blockchain operations are lumped together, putting significant limitations on throughput. Therefore, Mantle breaks these up into function-specific layers.

Data availability

One blockchain function is data availability (DA). This describes the ability for network participants (specifically, nodes) to access transaction data communicated by the Sequencer. DA can be thought of as *how to read the blockchain ledger. *This data is important because it is the way transactions are tracked and how each digital asset can be accounted for over time.

Mantle’s DA layer is powered by EigenLayer, which allows for re-staking of ETH on L1 to provide data services to Mantle’s L2. DA nodes store a copy of Mantle’s transaction data for whenever it is needed. By not relying on Ethereum’s L1 for DA, and implementing this more efficient but still secure alternative, Mantle hopes to scale more effectively.

How is the MNT token used?

The MNT token was originally the BIT token issued by BitDAO. As the native ERC-20 token of Mantle’s ecosystem, MNT is used to pay for transaction fees on the network and for participating in community governance through its decentralized autonomous organization (DAO). It has similar functionality to other L2 tokens.

Tokenomics

As of mid-2024, a little less than half of the total supply of MNT was held by the Mantle Treasury, which is directed by governance proposals via the Mantle Economics Committee. The remaining MNT are held by a mix of participants on the network, smart contracts, exchanges, and investors.

As a part of the conversion from BIT to MNT, all vesting schedules for BIT were accelerated so as not to complicate MNT’s supply and demand, and no vesting of MNT was planned. For context, 30% of all BIT were allocated to BitDAO’s treasury, and the remaining tokens were split among private sales (5%), launch partner rewards (5%), and its largest investor: Bybit (60%).

Conclusion

• Mantle is a layer 2 scaling solution (L2) for Ethereum that uses an optimistic rollup similar to Arbitrum and Optimism, though with some modifications.

• Mantle’s development began with the decentralized autonomous organization, BitDAO, which rebranded to focus solely on the L2 and boasts a strong funding basis.

• The MNT token was created out of BitDAO’s BIT token and is used to pay fees on the network and participate in community governance.