Factors That Made mETH the Fastest Growing Liquid Staking Protocol

*Special thanks to @Gem3a and whisker from Mantle for providing the review.

Key Takeaways

• mETH Protocol has achieved remarkable growth, becoming the fastest to reach $1B TVL (in 66 days) and currently ranks as the 4th largest ETH liquid staking token, with cmETH as the 6th largest liquid restaking token.

• Success factors include strong ecosystem integration from day one (across DEX, bridges, lending platforms) and maximized community rewards through strategic partnerships and token distribution.

• Building on this success, Mantle launched FBTC (a Bitcoin bridge) in August 2024, which quickly surpassed $1B in TVL, capitalizing on the market's need for a reliable wBTC alternative.

• As Mantle recently announced the launch of new products, can it follow in the footsteps of mETH and FBTC?

1. Background - mETH Protocol Has Built the Whole Staking Reward Pipeline

1.1 Rewards From “Staking Pipeline”

Source: Restaking Stack: Categorizing the Restaking Ecosystem | Four Pillars

When we think of staking ETH on Ethereum, we think of three different ways: vanilla staking, liquid staking, and restaking. Direct staking is the basic way to contribute to the security and validation of the Ethereum network and receive a reward of around 4-5%. From this came liquidity staking, which tokenizes direct staked positions, and then restaking, which recycles staked positions to secure other services. From an infrastructure perspective, these three form a single “ETH staking pipeline”.

Moving up from direct staking, liquid staking introduces additional reward opportunities. Protocols like Lido allow users to stake their ETH and receive liquid staking tokens (e.g., stETH) in return. These tokens can be utilized in various DeFi applications, potentially earning additional yield through lending, liquidity provision, or as collateral. Some ecosystems, like Mantle, may offer extra incentives for using their specific liquid staking solutions. Campaigns like mETH Protocol’s Double-Dose Drive exemplify these enhanced incentives, offering a 7.2% native yield, which is double the market reference rate for ETH liquid staking protocols. This campagin was funded by the Mantle Treasury's own staked ETH.

At the top of the pipeline sits restaking, a concept that gained significant traction in 2024. These protocols allow users to leverage their liquid staked assets to be staked again to multiple services like oracle, bridges, etc. This not only increases the potential yield for stakers but also enhances the overall security and capital efficiency. The exact rewards from restaking can vary depending on the specific services and protocols involved.

1.2 mETH Protocol has Built the Whole Pipeline (Powered by Mantle)

Mantle's mETH Protocol, formerly known as Mantle LSP (Liquid Staking Protocol), is a ETH liquid staking protocol initially built by Mantle. The protocol allows users to stake their ETH and receive mETH, a receipt token that represents the staked ETH and accumulated rewards. The protocol offers a highly rewarding experience by providing yield opportunities through MEV and Treasury yield sharing.

The protocol has recently expanded its offerings with the introduction of cmETH, a liquid restaking token. Building on the success of mETH, cmETH allows users to enjoy higher risk-reward across various restaking opportunities. Holders can easily leverage multiple vault strategies through automated, risk-adjusted allocation — all in just one token.

Its growth has been impressive, with a TVL of over $1.5B on mETH Protocol, mETH is currently ranked as the 4th largest ETH liquid staking token, while cmETH is the 6th largest ETH liquid restaking token.

Source: Growth of mETH in the Liquid Staking Market (Lido was excluded) | Artemis Terminal

2. Takeaway - Mantle Led DeFi Expansion is Continuing

2.1 mETH Protocol is the Fastest Liquid Staking Protocol to Reach $1 Billion

Source: Liquid Staking TVL Rankings - DefiLlama

mETH Protocol has become the fastest liquid staking protocol on Ethereum to reach $1 billion in TVL. Only four liquid staking protocols have achieved this milestone: Lido, RocketPool, Binance Staked ETH, and mETH Protocol. They reached this mark in 140, 558, 155, and 66 days respectively.

What made mETH Protocol this successful? The factors can be summarized in two - ecosystem and highest reward, and Mantle was behind the scene, pushing these two factors.

First, it had usage from Day 1 with an ecosystem full of dapps where mETH could be used. As Mantle was involved in creating mETH, it coordinated many DeFi protocols to integrate mETH. It quickly spread across many different DeFi protocols, including DEX (e.g. AGNI, Merchant Moe), Bridge (e.g. Stargate), Lending (e.g. INIT), etc. Its growth is also accelerating as it launched cmETH(LRT) on November 13th, 2024, which can capitalize on various restaking protocols like Eigen, Karak, and Symbiotic. It quickly crossed $500 million in TVL within a week.

Source: Meth - Dapps

Second, mETH Protocol has implemented a growth strategy centered around maximizing rewards for community. It has leveraged Mantle Treasury’s position to secure significant allocations from various sources, including EigenLayer. By restaking a large quantity of mETH into EigenLayer, the protocol earned substantial EigenLayer Points, which were then converted into EIGEN tokens. This strategic move allowed mETH Protocol to distribute an impressive 2.098 million EIGEN tokens to its users. In addition to external rewards, mETH Protocol has taken a bold step in allocating 60% of its governance token, $COOK, directly to the community. This generous distribution stands in contrast to some other protocols in the space, which have faced criticism for allocating large portions of tokens to team members and investors.

This simple strategies succeeded because it had strong backing from the Mantle core team. Since the Mantle core team built mETH Protocol, it received the full support from both the team and ecosystem. This support enabled access to Mantle's large treasury, allowing them to allocate substantial ETH assets to mETH. This alignment created powerful synergy.

I think the next growth will be on establishing mETH Protocol as a CeDeFi product by leveraging its institutional relationships. It could provide its high-yield tokens to non-crypto people through the partners’ channels. For example, Bybit, a 3rd largest CEX, offers several features for cmETH. Users can earn a 9.51% APR by staking their ETH to receive cmETH. Additionally, cmETH can be used as collateral for leverage trading and crypto loans. The exchange also provides a convenient one-click OTC service to convert stETH to cmETH.

2.2 FBTC Is the Next, but Not the Last

In August 2024, there was a controversy on wBTC (Wrapped Bitcoin), the biggest Bitcoin in Ethereum, as concerns arose over the token's association with controversial figure Justin Sun. This move came after BitGo, wBTC's custodian, entered into a partnership with BIT Global, a company linked to Justin Sun. The crypto community reacted with concern, leading to a significant outflow of funds from wBTC. Major DeFi platforms like Sky (prev. MakerDAO) and AAVE reconsidered their support for wBTC as collateral, further eroding trust in the token.

Source: Ignition FBTC - DefiLlama

Amidst this turmoil, FBTC, a Bitcoin bridge developed by Mantle and Antalpha Prime, capitalized on the opportunity to establish itself as a reliable alternative. Launched in August with support from Mantle, FBTC quickly gained traction in the market. The protocol's growth was remarkable, with its TVL surpassing $1 billion within few months. This rapid expansion was further bolstered by Mantle's ecosystem and the increasing demand for secure, transparent Bitcoin-pegged assets in the DeFi space.

Source: Total Bridged TVL by Token

FBTC also highlights the Mantle team's effort to launch a successful DeFi protocol that could have synergy with the Mantle ecosystem. Since wBTC is the 7th largest bridged asset in Mantle, FBTC could potentially capture that market share.

As Mantle recently announced the launch of new products, can it follow in the footsteps of mETH and FBTC?

Source: Mantle | Innovating the Future of On-Chain Finance

3. Resource

Related Articles, News, Tweets etc. :

• Four Pillars - Three Pillars to Build a Successful Rollup, and The Journey of Mantle

• Dune Dashboards: Mantle Network, mETH Protocol, FBTC Daily Report, Rewards Station

• Mantle - Unlock the Potential of mETH in Mantle Ecosystem

• Mantle - mETH Double-Dose Drive: 2X Market Yield