Deploy mETH markets on Fluid - Ethereum

Governance
1

Add mETH to Fluid Ethereum

Author: 0xjlow, Partnership Lead at Mantle Network

Date: 12-08-24

Summary

Mantle is seeking community support for adding its Liquid Staking Token, mETH (currently 4th largest ETH LSP), to Fluid on Ethereum.

mETH is one of the top liquid staking tokens in the market and an integration of mETH as a collateral asset can provide stronger proven diversification amongst existing LST collateral. This will also drive new synergies between the broader Mantle Ecosystem and Fluid, considering the latent TVL currently residing on Ethereum L1.

Motivation

mETH Protocol is the second core product of the Mantle Ecosystem. mETH Protocol is a permissionless, non-custodial ETH liquid staking protocol deployed on Ethereum L1 and governed by Mantle. Mantle Staked Ether (mETH) and Mantle Restaked Ether (cmETH) serve as the value-accumulating receipt tokens for mETH Protocol.

On the restaking front, cmETH differentiates itself as a unified liquid restaking token that is allocated across various staking protocols, providing users with exposure across the staking space on a risk adjusted index basis.

Since its launch in December 2023, mETH Protocol has achieved over 500,000 ETH staked and an all-time-high TVL of over $2.195 billion on 12 March 2024, only ~3 months from its initial launch. According to DeFiLlama, mETH Protocol is currently ranked 4th among industry-leading liquid staking protocols at $1.79 billion TVL.

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Source: DeFiLlama (as of Dec 5, 2024)

With mETH as one of the top liquid staking tokens in the market, integration of mETH as a collateral asset will drive new synergies between the broader Mantle Ecosystem and Fluid

Latest stats (5th Dec):

  • mETH: $1.79B USD TVL (445K ETH)
  • 34K stakers onboarded across L1 and L2
  • Live across Mainnet and Mantle L2

Initial Proposed Pools

  1. mETH Collateral & USDC debt:
  • Collateral Factor: 82%
  • Liquidation Threshold: 88%
  • Max Liquidation Limit: 92.5%
  • Liquidation Penalty: 2.5%
  • Withdrawal Gap: 5%
  1. mETH Collateral & USDT debt:
  • Collateral Factor: 82%
  • Liquidation Threshold: 88%
  • Max Liquidation Limit: 92.5%
  • Liquidation Penalty: 3%
  • Withdrawal Gap: 5%

We would also like to propose an ETH vault for diversifed LST collateral directed to ETH borrowing

  1. mETH Collateral & ETH debt:
  • Collateral Factor: 95%
  • Liquidation Threshold: 97%
  • Max Liquidation Limit: 98%
  • Liquidation Penalty: 0.1%
  • Withdrawal Gap: 5%

We invite the Instadapp team, DAO, and community to suggest initial lending limits/caps for the above markets and review of the above suggested parameters

Specification

Detailed explanation of mETH Protocol’s technical architecture here

mETH Protocol on-chain stats can be viewed on Dune.

Liquidity Pools for mETH

Following are liquidity stats for mETH:

  • mETH Protocol has >40M USD liquidity (excluding >100M USD in liquidity on Mantle L2) on Mainnet
  • ~$6.5M average weekly trading volume on Mainnet (Last 1 month as of 11-26-24)

mETH exchange rate mechanism:

Reference Rate

The reference rate is considered the “fair” or “midpoint” rate for mETH to ETH conversions. This is calculated based on the formula:

staking.totalcontrolledETH

meth.totalSupply

Primary Market Rates

Our Stake Rates (ETH to mETH) and Unstake Rate (mETH to ETH) can be calculated from our reference rate or queried according to the methods outlined in our documentation - mETH Protocol Primary Market Rate

Withdrawals

mETH can be unstaked at any point in time with unlimited capacity (based on amount of mETH in your custody. Settlement time generally requires 1-6 days as per typical unstaking operations - see Unstake Lifecycle.

Audits and Security

mETH Protocol has gone through significant audits by Hexens, Mixbytes and Secure3 for our smart contracts and oracles - mETH Protocol Audits

mETH Protocol also offers bug bounty programs through Immunefi, with maximum payouts of $500,000 - mETH Protocol Immunefi bounty

Oracles

Liquidity Layer Considerations:

The Mantle Core Contributor team is prepared to seed liquidity to jumpstart the mETH market on Fluid once mETH is onboarded, paired with demonstrated utilisation pathways on this collateral.

Useful Links:

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The team will include further links and explanations to relevant documentation and contracts once we have the link limit lifted

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No objections to deploying the three pools on Fluid and Mantle Core providing seed liquidity