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
Swapping about 1,250 cmETH for USDe begins to incur ~7% slippage.
Roughly the same is also true for swapping mETH to USDe.
Total Supply
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
USDe Price History
cmETH/USDe Volatility and Returns
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
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