Add cmETH on USDe on Mantle

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Add Collateral cmETH on USDe on Mantle

Author: 0xjlow, Partnership Lead at Mantle Network

Type: Collateral Deployment

Date: 12-23-24

Motivation

Mantle is seeking community support for adding its Liquid Restaking Token, cmETH, to Compound v3 on Mantle for USDe borrowing. With an increased focus on our restaking product and mETH as one of the top liquid staking tokens in the market, integration of cmETH will prove to be a synergistic collateral for users looking for superior and safe risk-adjusted yields on Mantle

Why mETH Protocol and cmETH

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 restaking protocols, providing users with exposure across the restaking space on a risk adjusted index basis.

mETH is currently ranked 4th among industry-leading liquid staking protocols at $1.7 billion TVL

Latest stats (23rd Dec):

  • mETH: $1.5B USD TVL (441K ETH)
  • cmETH: $646M (176K cmETH)
  • 34K stakers onboarded across L1 and L2
  • Live across Mainnet and Mantle L2

Proposed Markets

  • cmETH <> USDe

Specification

Detailed explanation of cmETH’s technical architecture here

cmETH on-chain stats can be viewed on Dune.

Liquidity Pools for cmETH (Mantle)

Following are relevant liquidity stats for cmETH amongst other available cmETH pools:

Exchange rate mechanism:

  • cmETH is pegged 1:1 to mETH, with contract based supply outlined below, inheriting mETH’s core staking yields
  • cmETH restaking rewards are managed by a rewardHandler outside of the cmETH token value as outlined in our architecture document

cmETH accounting mechanism:

Relevant Contracts

cmETH (L1 + Mantle) 0xE6829d9a7eE3040e1276Fa75293Bde931859e8fA
mETH 0xd5F7838F5C461fefF7FE49ea5ebaF7728bB0ADfa
BoringVault 0x33272D40b247c4cd9C646582C9bbAD44e85D4fE4
DelayedWithdraw 0x12Be34bE067Ebd201f6eAf78a861D90b2a66B113
PositionManager-Karak 0x52EA8E95378d01B0aaD3B034Ca0656b0F0cc21A2
PositionManager-Symbiotic 0x919531146f9a25dfc161d5ab23b117feae2c1d36
PositionManager-Eigen_A41 0x6DfbE3A1a0e835C125EEBb7712Fffc36c4D93b25
PositionManager-Eigen_P2P 0x021180A06Aa65A7B5fF891b5C146FbDaFC06e2DA
SymbioticRestakingPool 0x475d3eb031d250070b63fa145f0fcfc5d97c304a
L1cmETHAdapter 0x4afa9620d0b79137383a7a9ab3477837d475e948

Calculation of cmETH total supply

|A1|

  • mETH.balanceOf(BoringVault)|

|A2|

  • mETH.balanceOf(PositionManager-Karak) +
  • mETH.balanceOf(PositionManager-Symbiotic) +
  • mETH.balanceOf(PositionManager-Eigen_A41) +
  • mETH.balanceOf(PositionManager-Eigen_P2P)

|A3|

  • PositionManager-Karak.getTotalLPT() +
  • SymbioticRestakingPool.balanceOf(PositionManager-Symbiotic) +
  • PositionManager-Eigen_A41.getTotalLPT() + PositionManager-Eigen_P2P.getTotalLPT()|

|A4|

  • mETH.balanceOf(DelayedWithdrawal)|

|A|

  • A1 + A2 + A3 + A4 ( Total Underlying mETH )|

|B|

  • L1cmETH.totalSupply()

|A=B|

Withdrawals

All cmETH unstake requests will go through an 8-hour waiting period before mETH can be claimed. Claimability also depends on the amount of mETH available in the exit queue ( the mETH balance in DelayedWithdrawal, A4). There is no minimum unstake amount.

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

cmETH is pegged 1:1 with mETH and it’s contract supply in ETH can be derived from the methods outlined above in “Calculation of cmETH total supply” together with mETH Contract Reference Rate below

Important Links

Next Steps

We invite the community to give their feedback and recommendations for the asset.

2 Likes
2

Gauntlet - Parameter Recommendations for cmETH on Mantle USDe Comet

Simple Summary

If the community wishes to initialize cmETH as collateral on the Mantle USDe Comet, Gauntlet recommends the following risk parameters.

Collateral Supply Cap Collateral Factor Liquidation Factor Liquidation Penalty
cmETH 1,250 70% 75% 12%

Analysis

DEX Liquidity (selected pools)

Pool Type Pool Name Pool TVL (USD) 24H Volume (USD) URL
Agni WETH / cmETH 0.05% $44.64M $92.15K Link
Agni mETH / cmETH 0.01% $24.67M $967.86K Link
Merchant Moe cmETH / USDe $18.38M $1.18M Link
Agni USDe / cmETH 0.25% $13.21M $1.09M Link
Merchant Moe cmETH / WETH $12.23M $71.13K Link
Merchant Moe cmETH / mETH $11.07M $643.00K Link

Total TVL: $124.2M

DEX Slippage

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image1920Ă—1069 80.1 KB

Swapping about 1,250 cmETH for USDe begins to incur ~7% slippage.

image
image1920Ă—1046 79 KB

Roughly the same is also true for swapping mETH to USDe.

Total Supply

image
image2232Ă—569 36.3 KB

We see that cmETH supply on Mantle has increased by around 70% from ~78K in November 2024 to ~133K in end of January 2025.

Supply Cap and Liquidation Penalty

We recommend a supply cap of 1,250 initially, which encounters roughly 7% slippage should this full amount of collateral be liquidated at once. Accounting for the comet’s store front price factor of 60% plus small buffer to entice liquidation, we recommend a liquidation penalty of 12%. Outside of direct DEX swaps, liquidators would be largely left to redemptions of cmETH to mETH and then swapping, which have an 8-hour lockup period and are subject to further downward LST price risk. This would also incur similar slippage in current conditions, and liquidity could expect to further dry up during a market downturn.

Collateral Factor (CF) and Liquidation Factor (LF)

cmETH/mETH Price History

image
image1839Ă—883 101 KB

USDe Price History

image
image1825Ă—753 51.1 KB

cmETH/USDe Volatility and Returns

image
image2330Ă—1382 132 KB

mETH and cmETH have remained close to 1:1 peg at market, and USDe has remained close to its peg to $1, though recent volatility has risen and a prolonged market downturn further heightens depeg risk should negative funding rates for short perpetuals persist (though here a downward stablecoin depeg would actually improve the health of borrowers’ positions). Based on the provided metrics and the proposed liquidation penalty, Gauntlet recommends setting a collateral factor (CF) of 70%, with a liquidation factor (LF) of 75% for the USDe comet. These choices aim to balance capital efficiency with risk mitigation.

Yield Risk

image
image2053Ă—1522 249 KB

Currently LRTs such as cmETH have elevated yields due to points programs which are likely to cause yield shocks (from Pendle, currently the underlying APY is 3.6% vs YT/PT implied APY of 8.6%) and consequentially elevate slippage magnitude on DEXs. Gauntlet would like flag this potential risk to the community.

Next Steps

  • We welcome community feedback
1 Like
3

I use cmETH, like it

I wish Mantle would invest more time on the Compound Comets deployed on Mantle. Seems like a growth driver is needed to push usage more

1 Like
4

Hey, we have identified certain growth restraints for comets on Mantle. Primary among them is no native deployment of USDT or USDC. Secondly there are not many structured products to properly utilize the liquidity.

We are working with the mantle team to have a clear strategy in this direction