Overview
Chaos Labs supports listing WMNT on Aave’s Mantle deployment. We do not recommend listing mETH or cmETH at this time. Below, we provide our analysis and recommendations.
Mantle Network Overview
Mantle Network is an Ethereum Layer 2 scaling solution developed by BitDAO, the decentralized initiative supported by the centralized exchange Bybit. It utilizes Optimistic Rollups and a modular architecture to enhance scalability, reduce transaction fees, and maintain Ethereum compatibility. This design separates execution, settlement, and data availability layers, allowing for independent upgrades and improved performance. For a more detailed explanation of the Mantle Network and its architecture, you can refer to our previous analysis.
MNT
MNT is the native utility and governance token of the Mantle ecosystem. It serves a dual purpose:
- Gas Fees: Used to pay for transactions on the Mantle Network.
- Governance: Holders can participate in decision-making processes within the DAO.
Market Capitalization
The MNT token was originally deployed on Ethereum Layer 1 on June 20, 2023, as specified in MIP-23, with a total supply of 6,219,316,768. The DAO retains the option to mint additional MNT in the future to support the continued growth of the ecosystem.
The DAO Treasury currently holds 2,795,022,409.2 MNT (45% of the total supply). Any distribution of MNT from the Treasury requires explicit authorization, primarily through budget proposals.
MNT is one of the top 100 crypto tokens by market capitalization, currently holding a market cap of $2.2 billion and a FDV of $4.1 billion. Over the past 17 months, its market cap has fluctuated between $2 billion and $4.5 billion.
To date, a net total of 318,959,600 MNT has been bridged from Ethereum to the Mantle network, representing 5.1% of the total supply and 9.3% of the circulating supply. This number is expected to grow, particularly with the deployment of protocols like Aave on Mantle Network.
Liquidity
More than 90% of MNT’s on-chain liquidity is managed by the protocol’s treasury. This means Mantle actively oversees protocol-owned liquidity for MNT on both Ethereum and the Mantle Network. All addresses managing these liquidity positions can be found in the Treasury Holdings section of their documentation.
Historically, most of MNT’s on-chain liquidity was paired with ETH on Ethereum. In late February 2025, Mantle migrated its protocol-owned liquidity to the MNT-USDe pair and simultaneously reduced the amount of liquidity deployed on Ethereum and migrated most of the liquidity to Mantle Network.
As a result, MNT’s on-chain liquidity on the Mantle network increased to $15.5 million. Of this amount, $11 million is composed of MNT tokens, leaving just $4.5 million in buy liquidity, which is mostly concentrated in stablecoins—primarily USDe.
With the migration of protocol-owned liquidity to the Mantle network, it’s now possible to trade $2 million worth of MNT into stablecoins with less than 10% price impact. This gives the MNT token deeper liquidity on Mantle compared to Ethereum mainnet. Since this liquidity is owned by the protocol, it also provides a more reliable and sustainable trading environment.
It’s also important to note that MNT’s price discovery primarily occurs on centralized exchanges, with over 90% of its trading volume taking place on platforms like Bybit and MEXC. Together, these two major exchanges offer approximately $2 million in liquidity within a ±2% price range. This setup creates opportunities for CEX-DEX arbitrageurs, who can help deepen on-chain liquidity by capitalizing on price discrepancies between markets.
Volatility
The volatility of the MNT token has been moderately high; however, when compared to other alternative Layer 1 and Layer 2 tokens such as S, AVAX, OP, and ARB, MNT has shown greater price stability over the same period.
Among the group, MNT recorded the lowest maximum drawdown at 13.02%, whereas the others experienced drawdowns ranging from 16.6% to 20.21%.
MNT also exhibited the lowest 30-day daily annualized volatility at 49.23%, while the other tokens’ volatility ranged between 92% and 129%.
This relative stability is particularly notable given MNT’s thinner on-chain liquidity. A key factor contributing to its resilience is the strong backing from Bybit, one of the largest centralized exchanges in Asia. Major market makers operating on Bybit and other CEXs provide deep liquidity and facilitate efficient price discovery, which helps anchor MNT’s market behavior despite limited on-chain liquidity.
Bridging
The MNT token is natively minted exclusively on Ethereum Layer 1. Once minted, it can be transferred to the Mantle Network (Layer 2) via Mantle’s canonical bridge.
Deposits from Ethereum to Mantle are processed through standard rollup mechanisms and typically finalize within approximately 12 minutes, enabling users to access and interact with the Mantle ecosystem with minimal delay.
Withdrawals from Mantle back to Ethereum, however, are subject to a challenge period—a core security feature of Optimistic Rollups. This period, which can last up to 7 days, allows time for the submission of fraud proofs in the event of any invalid state transitions. While this mechanism ensures a trustless and secure bridging process, it also introduces a delay before assets become fully accessible on Ethereum Layer 1.
Supply Cap and Borrow Cap
Although on-chain liquidity for MNT is limited, it is protocol-owned and relatively stable. The token’s price volatility has been moderately lower compared to other alternative Layer 1 and Layer 2 tokens. This relative stability is largely attributed to strong support from Bybit and active market-making by its designated market makers, which help maintain deep liquidity in centralized exchange order books.
Based on these considerations, we recommend setting the MNT supply cap at 15 million.
We also recommend setting the borrow cap slightly above the supply cap’s Uoptimal level, at 7 million MNT.
Oracle/Pricing
We recommend using the MNT/USD Chainlink Price Feed for pricing MNT.
mETH Protocol Overview
The mETH Protocol is a permissionless, vertically integrated solution designed to simplify ETH staking and extend its utility through restaking. Built on Ethereum, the protocol enables users to stake ETH and receive mETH, a liquid staking token that accrues rewards over time.
mETH serves as the base layer of the protocol offering straightforward staking. Redemption (unstaking) of mETH typically involves a ~4-day wait period and carries no fees. However, this wait time is not fixed and can vary depending on network conditions at the Ethereum consensus layer. Specifically, if the global validator exit queue becomes congested—such as during periods of mass exits across the network—the redemption process may take longer. This is because the Beacon Chain currently limits exits to 8 validators per epoch (approximately every 6.4 minutes), meaning large-scale exits can create delays beyond the standard expectation. Regardless of conditions on the Mantle Network, mETH redemption times are fundamentally tied to Ethereum’s consensus-layer dynamics. Additionally, mETH can be freely traded across multiple DeFi venues, enabling liquidity and composability throughout the Ethereum and Layer 2 ecosystems.
Beyond liquid staking, the protocol enables restaking through a secondary asset, cmETH, which is issued when users opt into additional yield-generating opportunities that also carry increased slashing risks. Users who wish to access restaking rewards can convert mETH to cmETH at a 1:1 ratio. To redeem cmETH back to mETH, users must initiate an unstaking process that involves a minimum 8-hour waiting period; however, depending on queue availability and the withdrawal delays imposed by underlying restaking platforms, this period can extend up to 7 days or longer.
These opportunities include restaking on platforms such as EigenLayer, Symbiotic, Karak, and others. This layered structure allows users to choose their preferred balance of risk and return—from base staking yields with mETH to enhanced restaking rewards with cmETH.
Governance, Security Roles, and Upgradeability
The mETH Protocol incorporates multiple mechanisms to safeguard protocol integrity, manage upgradeability, and address critical events through role-based permissions and multisig governance.
The Security Council—a group of designated addresses with elevated privileges—operates as a 6-of-13 multisig without a timelock and is responsible for overseeing both the mETH and cmETH contracts. While this structure provides operational flexibility and rapid response capabilities, the high concentration of control within a small group introduces meaningful governance risks. As the protocol matures, managing and progressively decentralizing this authority will be critical to ensuring long-term trust and resilience.
Emergency Controls and Role-Based Pausing
The Security Council Guardians have the ability to pause the mETH staking contract under emergency conditions. Notably, any individual Guardian may unilaterally pause the protocol to mitigate potential risks.
In addition to manual intervention, the protocol also features automated pause logic triggered by the oracle system. The oracle contract continuously monitors for anomalous behavior and can automatically pause the staking contract if:
- An oracle update falls outside of configured sanity bounds, or
- A slashing event is detected, resulting in a cumulative loss greater than 0.1% of protocol-controlled ETH.
Once the protocol is paused only addresses with the Unpauser role may resume operations.
It’s important to highlight that the mETH:ETH exchange rate oracle updates only every 8 hours. In the event of a major slashing incident, this update cadence introduces a window during which stale prices could persist on Aave markets. If the Security Council Guardians do not act quickly enough to manually pause affected activities, Aave could be exploited through recursive borrowing based on outdated valuations, leading to unnecessary protocol losses and bad debt.
This risk could be mitigated through the use of a Risk Oracle for Aave’s mETH markets. The Risk Oracle could automatically freeze the market if mass slashing is detected. By immediately freezing the market until a valid price update occurs, a Risk Oracle would help shield Aave from additional systemic losses during the critical 8-hour window before the next exchange rate update, significantly reducing exposure to cascading risks.
Security Council Authority During Emergencies
In extreme scenarios, the Security Council Multisig possesses the authority to intervene directly in the protocol’s operation. Through multisig approval, the Security Council may:
- Upgrade the logic of any deployed smart contract,
- Change withdrawal addresses,
- Modify protocol roles and permissions, and
- Adjust configurable protocol variables.
While these privileges serve as an emergency mechanism to protect the protocol against attacks or failures, this level of centralized control also introduces governance risk. Concentrating such critical powers in a small group of actors can create single points of failure or capture risk, particularly as the protocol scales.
Recognizing this, the Mantle team has outlined plans to progressively decentralize and reduce the Security Council’s intervention authority over time. Considered measures include:
- Transferring Security Council powers to an on-chain DAO controller,
- Implementing a non-zero Timelock delay for contract upgrades and critical changes, and
- Burning upgrade keys entirely once the protocol reaches sufficient maturity and operational stability.
These steps aim to enhance trust minimization, improve transparency, and align the protocol more closely with decentralized governance principles as it evolves.
Contract Upgradeability
The mETH Protocol employs a standardized upgradability framework using OpenZeppelin’s TransparentUpgradeableProxy contracts.
Timelock
To protect against hasty or malicious upgrades, all contract upgrade actions are subject to execution via a Timelock Controller. This mechanism introduces a delay between when an action is scheduled and when it can be executed.
Currently, the timelock is configured with a default delay of 0, meaning upgrades can be scheduled and executed immediately. However, the Mantle governance process has indicated that this delay will increase over time as the protocol matures, aligning with industry best practices for decentralized governance.
mETH
mETH Technical Overview
mETH is a value-accruing LST that represents a user’s staked ETH along with the corresponding Ethereum staking rewards. Unlike a 1:1 pegged token, mETH’s value appreciates over time as staking rewards accumulate. As a result, its market price reflects a dynamic exchange rate between ETH and mETH, driven by the underlying yield.
mETH Staking Diagram
When users stake ETH through the mETH protocol on Ethereum Layer 1, their deposits are routed to Mantle’s staking contract, which subsequently forwards the ETH to Ethereum’s Beacon Chain deposit contract. In return, users receive mETH tokens representing their stake.
To run the underlying validators, Mantle partners with third-party node operators, including well-known infrastructure providers such as A41, P2P, Blockdaemon, and Stakefish. These operators manage validator duties on behalf of mETH holders and receive a 10% fee on the staking rewards, encompassing both consensus and execution layer earnings. This fee is applied only to the rewards, not the principal.
While this delegation model helps decentralize validator operations and offload technical complexity from end users, it introduces a layer of opacity. Specifically, there is limited public information regarding:
- Node Operator concentration among these operators (i.e., how much stake each controls),
- Client diversity, particularly the execution and consensus clients (e.g., Geth, Prysm, Lighthouse) used by these operators.
This lack of transparency makes it challenging to evaluate mETH’s exposure to correlated slashing risks at the Ethereum consensus layer. By contrast, our analysis of Ethereum Consensus Layer penalties in the context of Lido’s validator distribution illustrates how validator and client concentration can significantly impact a staking protocol’s vulnerability to slashing and liveness failures
Until this operator composition and infrastructure diversity is disclosed in greater detail, it remains challenging to quantify the underlying risks associated with mETH’s validator set.
Redemption
To redeem mETH, users initiate an unstaking process that typically takes around four days to complete, reflecting Ethereum’s validator exit and withdrawal mechanisms. However, it’s important to note that this timeline is not fixed and can vary based on the state of the Ethereum consensus layer at the time of the request. In periods of heavy network congestion—such as mass validator exits—the wait time can increase significantly, as the Beacon Chain currently limits exits to approximately eight validators per epoch (every ~6.4 minutes). This natural bottleneck can extend the unstaking period well beyond the typical four days if exit queues become saturated. There are no additional fees for redemption. In addition to staking and unstaking, mETH remains freely tradeable on various decentralized exchanges, where transactions are instant but subject to slippage and standard swap fees depending on market depth.
Bridging
mETH is natively minted on Ethereum Layer 1 and can be bridged to the Mantle Network via the official Mantle canonical bridge. Bridging from Ethereum to Mantle typically finalizes within ~12 minutes, allowing users to access mETH within the Mantle ecosystem with minimal delay.
This process follows standard optimistic rollup mechanics:
- L1 → L2 transfers usually finalize within 2 to 12 minutes, depending on network conditions.
- L2 → L1 withdrawals require a challenge period of 3 to 7 days, ensuring security via fraud-proof mechanisms.
In addition to the canonical bridge, several third-party bridges also support mETH transfers between Ethereum and Mantle. However, these options typically offer limited liquidity, and due to this, users may encounter significant slippage, especially when attempting to move larger amounts.
Market Capitalization
A total of 368,000 mETH is currently in circulation, backed by 391,596 ETH staked on the Ethereum consensus layer. The total supply of mETH has been on a downward trend since April 2024, when it peaked at around 520,000 mETH. Over the past 12 months, the supply has decreased by approximately 30%.
At present, 10% of the mETH supply is bridged to the Mantle network, amounting to 38,735.6 mETH. In October 2024, this figure was as high as 40%, with around 188,000 mETH available on Mantle. However, since then, the mETH supply on Mantle has declined significantly—dropping by roughly 80%.
In summary, while the overall supply of mETH has decreased, the decline on the Mantle Network has been even steeper. There are currently no clear signs that this trend will reverse in the near future.
It’s also important to consider cmETH, the protocol’s restaking token. Approximately 55% of the total mETH supply—around 201,500 mETH out of 368,000—has already been restaked across platforms such as Karak, EigenLayer, and Symbiotic. These restaked tokens are locked in restaking contracts and are therefore unavailable participate in DeFi as a liquidity source.
Liquidity
The on-chain liquidity for the mETH token has dropped significantly—from a peak of over $200 million in November 2024 to just $1.6 million today. This decline has occurred in parallel with the reduction of mETH supply on the Mantle Network.
Currently, only around $1 million in mETH buy liquidity remains in liquidity pools. At its peak, this figure was approximately $72 million. This marks a substantial loss of on-chain liquidity.
Due to the limited on-chain liquidity, trading more than $1 million worth of mETH (approximately 550 mETH at current prices) incurs a significant price impact—exceeding 11%.
It’s also worth highlighting that the largest mETH liquidity pool is currently paired with cmETH on the Mantle Network, representing over 56% of the total on-chain liquidity—$0.9 million out of $1.6 million. Since cmETH is backed 1:1 by mETH, relying on this pool as the primary source of liquidity poses risks during periods of market stress. Given that cmETH is essentially a wrapper of mETH, it is expected to mirror mETH’s price movements, offering little in the way of diversification or price stability.
On Ethereum, mETH liquidity is better than on the Mantle Network but still limited. Following a major withdrawal in late February—during which over 80% of the liquidity was removed—only $5.3 million in liquidity remains on Ethereum.
Volatility
The market price of mETH on the Mantle Network has shown moderately high volatility but remains closely aligned with its underlying exchange rate. During the observed period, there were instances—particularly in late February—where the deviation exceeded -0.7%. For comparison, similar assets recorded slightly lower maximum deviations over the same timeframe: wstETH diverged by up to 0.32%, weETH by 0.26%, and ezETH by 0.35%.
Pricing/Oracle
The mETH Protocol relies on an on-chain oracle deployed on Ethereum mainnet to determine the exchange rate between ETH and mETH. This oracle governs the value accrual of mETH and is responsible for ensuring accurate and secure price updates across the protocol.
The oracle operates with a 3-of-6 quorum—meaning at least three out of six authorized oracle nodes must agree on the price update for it to be submitted on-chain. Updates are pushed every 8 hours.
To safeguard against erroneous inputs, the oracle includes built-in sanity checks that prevent the submission of unreasonable or outlier values. These checks ensure the integrity of the mETH price feed and reduce the risk of protocol disruption due to faulty or manipulated data.
On the Mantle Network, mETH does not yet benefit from a native oracle feed. Although Chainlink is live on Mantle, it currently does not support mETH pricing. This can lead to price dislocations relative to the mainnet reference rate, particularly during periods of low liquidity or heightened volatility.
To address this gap, deploying a cross-chain oracle relay that securely mirrors the mainnet exchange rate onto Mantle would be an important improvement. Similarly, other lending protocols have adopted an API3-based solution, where nodes retrieve the mETH/ETH exchange rate directly from Mantle’s staking contract on Ethereum and aggregate it with the ETH/USD price feed to derive an mETH/USD value.
Without the introduction of a reliable oracle solution, protocols like Aave would remain exposed to elevated risk from potential price divergence between mETH on Mantle and its reference rate on Ethereum mainnet. This vulnerability is further amplified by the relatively low on-chain liquidity of mETH on Mantle, making it easier for market prices to deviate significantly from fair value during periods of market stress.
Recommendation
Based on our analysis, Chaos Labs does not recommend listing mETH at this time. While mETH maintains reasonable liquidity on Ethereum mainnet, several critical risks persist on the Mantle Network. These include significantly reduced on-chain liquidity, the absence of a native oracle-based price feed, and heavy reliance on the cmETH-mETH pool, which lacks diversification and poses heightened volatility risks. Additionally, the lack of fast and liquid bridging solutions—with the canonical bridge requiring multi-day withdrawal periods and third-party bridges offering limited capacity and high slippage—further undermines cross-chain usability. Given these limitations, listing mETH at this stage presents outsized risk for a lending protocol like Aave. We recommend revisiting the listing decision once the asset’s pricing infrastructure, liquidity depth, and bridging mechanisms are improved.
cmETH
cmETH Technical Overview
cmETH is a Liquid Restaking Token (LRT) that allows users to amplify their Ethereum staking yield by restaking their mETH across multiple restaking platforms such as EigenLayer, Symbiotic, and Karak. While mETH only earns Ethereum staking rewards, cmETH unlocks access to restaking rewards distributed in various third-party assets. Notably, 20% of these restaking rewards are allocated to support growth initiatives. Rewards are claimable on a periodic basis, offering users enhanced returns, but with the tradeoff of increased exposure to platform-specific and slashing-related risks.
Mint
cmETH is minted exclusively on Ethereum Layer 1 by converting mETH at a fixed 1:1 rate, after which it can be bridged to Mantle. Alternatively, users on Mantle L2 can acquire cmETH directly from liquidity pools via supported decentralized exchanges.
Redemption
While cmETH does not impose a fixed lock-up period, unstaking is subject to either an 8-hour delay or, in some cases, up to ~7 days, depending on available protocol inventory and the cooldown periods of third-party restaking platforms. During this time, unstake requests are processed based on mETH availability in the protocol’s unstaking queue. Once the request is fulfilled, users receive mETH, which can then be redeemed for ETH through the standard unstaking process. All redemptions must be initiated and completed on Ethereum.
Restaking Slashing Risks
Unlike mETH, which is solely exposed to Ethereum’s base staking risks, cmETH introduces an additional layer of risk through restaking. This is because the mETH backing cmETH is actively deposited into various restaking platforms, such as EigenLayer, Symbiotic, and Karak, where it is delegated to operator sets that participate in Actively Validated Services (AVSs).
These operators, selected by the Mantle team, can opt in to provide unique stake on AVSs, making the mETH they manage subject to slashing penalties if misbehavior occurs. With the launch of slashing enforcement on EigenLayer’s mainnet, this risk became tangible. Notably, just before slashing was activated, the Mantle team withdrew all of their delegated mETH from EigenLayer, potentially in response to heightened risk. As of now, 160,902.81 out of 209,021.41 mETH (~76%) held by Mantle is unallocated, meaning it is neither earning restaking rewards nor actively subject to slashing.
At this time, there is no public explanation from Mantle regarding the rationale behind this withdrawal or any future plans for reallocating these unassigned mETH tokens. This introduces a degree of uncertainty around the long-term direction of Mantle’s restaking strategy and the security assumptions underpinning cmETH.
How Slashing Affects cmETH Value
The conversion between mETH and cmETH is governed by a manually adjustable exchangeRate, which is initialized at a 1:1 ratio. The cmETH minting logic resides in the Deposit() function within the Teller contract, which calls getRateInQuoteSafe(), a wrapper function that derives the conversion rate from the internal exchangeRate state variable. This rate is stored in accountantState in AccountantWithRateProviders contract and determines how much cmETH a user receives in exchange for depositing mETH and vice versa.
Importantly, the exchangeRate can only be changed via manual intervention using the updateExchangeRate() function, and only by an address granted the UPDATE_EXCHANGE_RATE_ROLE. To date, this function has never been called, and the rate remains fixed at its default value of 1e18.
If a slashing event were to occur on a restaking platform—reducing the backing value of cmETH—the exchange rate would not reflect that change unless manually updated by the protocol’s admin. This introduces a latent risk that cmETH could temporarily trade at a value misaligned with its underlying backing, especially in the event of a slashing incident.
Bridging
cmETH leverages the LayerZero OFT (Omnichain Fungible Token) standard, enabling fast and seamless bridging across supported chains. This infrastructure allows users to move cmETH between networks in approximately five minutes, with no slippage—offering a significant improvement in speed and usability compared to traditional bridging solutions.
Market Capitalization
Since the beginning of 2025, the circulating supply of cmETH has remained relatively stable, fluctuating between 200,000 and 230,000 tokens, even as the total supply of mETH has declined significantly over the same period. This stability suggests sustained user interest in restaking opportunities, despite broader market conditions and the relative contraction in base staking demand.
Historically, the majority of cmETH supply has been bridged to the Mantle Network, with its share consistently exceeding 60% during peak periods. While this figure has recently declined from around 65% to just above 50%, more than half of the total cmETH supply remains actively used on Mantle—a noteworthy sign of persistent cross-chain activity and DeFi engagement on Layer 2.
This stands in sharp contrast to mETH, where only around 10% of the total supply is bridged to Mantle. The disparity can be explained by several key factors.
First, cmETH users generally have a higher risk appetite, as they are more willing to engage with restaking platforms and assume additional slashing risks. In contrast, mETH users are exposed solely to Ethereum’s base staking risks and tend to be more risk-averse, preferring to keep their assets on Ethereum mainnet.
Second, cmETH benefits from LayerZero’s OFT (Omnichain Fungible Token) standard, which enables fast and slippage-free bridging to and from Mantle. This significantly improves the user experience compared to traditional canonical bridges, which often involve multi-day delays.
Third, the Mantle ecosystem has actively promoted cmETH usage through its Methamorphosis points program, now in its third season. This program rewards users who bridge cmETH to Mantle and engage with DeFi protocols there. In contrast, no comparable incentives currently exist for mETH, making cmETH the more attractive option for users seeking utility and rewards on Mantle.
Liquidity
The liquidity profile of cmETH has experienced a notable contraction since its peak in late 2024. In November 2024, total on-chain liquidity for cmETH exceeded $150 million, but by April 2025, it had dropped significantly to approximately $27 million. Despite this decline, cmETH still maintains a reasonably healthy level of liquidity.
It is important to note that, out of the current $27 million in liquidity, $19.3 million—roughly 75%—is held in cmETH itself, indicating that most liquidity pools are heavily concentrated in the cmETH token and not in its trading pairs. This means that the actual buy liquidity (i.e., non-cmETH assets available for swapping out of cmETH) is only $6.7 million. Notably, $5.1 million of this is paired with fBTC, while the remaining $1.6 million is split between ETH and stablecoin pairs such as USDT and USDe.
A trade simulation confirms this limited buy side depth: swapping 900 cmETH ($1.66 million) for USDT on Mantle currently results in a 5.5% price impact.
While multiple liquidity pools for cmETH are incentivized by the Methamorphosis points program—including USDe-cmETH (on Agni and Merchant Moe), WETH-cmETH (on Agni), and mETH-cmETH (on Merchant Joe)—over 90% of the liquidity in these pools is provided directly by the Mantle Treasury, rather than organic liquidity from users or other market makers.
As discussed in bridging section cmETH benefits from its OFT integration via LayerZero, which makes it highly portable between Ethereum and Mantle. This design feature enhances cross-chain liquidity dynamics, allowing arbitrageurs to utilize liquidity from Ethereum mainnet to balance supply and demand across networks.
On Ethereum, however, cmETH liquidity remains minimal, with only a single pool historically available, paired against mETH with roughly $2 million in TVL, entirely provided by the Mantle Treasury.
Still, the cmETH/mETH pool on mainnet could hold strategic importance. Since mETH is paired with over $5.3 million in ETH liquidity on Ethereum—as shown in the mETH Liquidity section—arbitrageurs can bridge cmETH from Mantle to mainnet and route trades through cmETH → mETH → ETH. This allows them to leverage mainnet liquidity to support trading activity on Mantle, particularly when local buy liquidity is constrained on Mantle Network.
Volatility
The volatility of cmETH has historically mirrored that of mETH on the Mantle Network, particularly in relation to its exchange rate against ETH. This close correlation is expected, as cmETH is a 1:1 mintable and redeemable asset for mETH on Ethereum mainnet, meaning their price movements are tightly coupled.
Given this relationship, cmETH exhibits similar price dynamics and reacts in tandem with mETH to market conditions. As a result, any deviation in cmETH pricing is typically a reflection of underlying movements in mETH, rather than independent volatility.
Pricing/Oracle
The pricing of cmETH is fundamentally anchored to mETH, as currently cmETH is minted and redeemable 1:1 against mETH on Ethereum mainnet. This conversion mechanism is critical—not only for price parity, but also because cmETH functions as a Liquid Restaking Token. Unlike mETH, which is exposed only to Ethereum staking risks, cmETH inherits additional risk from restaking platforms, including the possibility of slashing. Therefore, maintaining a reliable and enforceable redemption path back to mETH is essential to uphold cmETH’s value and its role in risk-managed DeFi integrations.
There is currently no Chainlink oracle for cmETH on the Mantle Network, even though Chainlink itself is operational on Mantle. This creates a gap in oracle coverage for protocols like Aave that depend on real-time, tamper-resistant price feeds to manage collateral valuations, loan health, and liquidation logic.
To enable cmETH’s safe inclusion in lending protocols, a robust pricing oracle is needed on Mantle. This feed should accurately reflect cmETH’s linkage to mETH—potentially by referencing the mETH/ETH exchange rate from Ethereum.
We recommend developing a robust cmETH/USD pricing feed by aggregating three key exchange rates: cmETH:mETH, mETH:ETH, and ETH:USD. This multi-hop pricing approach ensures that cmETH’s value reflects both its direct convertibility to mETH and the broader market value of ETH. Without such infrastructure, lending against cmETH introduces heightened exposure to price manipulation and unaccounted slashing risk—especially in the absence of a verifiable and trusted oracle on Mantle to support accurate and secure collateral valuation.
Recommendation
While cmETH exhibits several promising attributes as a collateral asset, Chaos Labs does not currently recommend its listing on Aave’s Mantle deployment due to a combination of oracle infrastructure gaps and strategic uncertainty in its restaking model.
On the positive side, cmETH maintains adequate liquidity across both the Mantle Network and Ethereum mainnet, particularly in contrast to mETH, which has experienced a steep liquidity decline on Mantle. cmETH also benefits from fast and low-slippage bridging via LayerZero’s OFT standard, which supports more efficient capital mobility and enables arbitrageurs to help align prices across chains. Furthermore, cmETH has demonstrated stable volatility characteristics, closely tracking its underlying exchange rate to ETH through its 1:1 mint/redeem parity with mETH.
However, several critical concerns remain unresolved. First, Mantle’s current restaking strategy lacks transparency. As of now, 76% of the mETH backing cmETH is unallocated, meaning withdrawn from restaking platfroms. There is no public information regarding the intended allocation strategy going forward, or the nature of Mantle’s agreements with third-party restaking node operators. This lack of clarity introduces uncertainty around the yield generation and security assumptions underlying cmETH.
Second, and most importantly, there is no pricing oracle infrastructure on Mantle to securely support cmETH in a lending environment. As a Liquid Restaking Token, cmETH introduces additional risk—particularly slashing risk tied to misbehaving operators on restaking platforms. While the protocol allows for manual adjustment of the cmETH:mETH exchange rate via a role-gated function, it lacks an in-protocol oracle-based mechanism to automatically update the rate in response to slashing events. This creates a significant blind spot: in the event of a slashing incident, the cmETH-to-mETH redemption value could become misaligned with the token’s actual backing unless manually updated by governance or protocol admins. Until a transparent and automated pricing mechanism is implemented, this conversion logic remains a risk vector.
To support cmETH as a safe and borrowable asset, a comprehensive oracle solution is required. This includes aggregating cmETH:mETH, mETH:ETH, and ETH:USD price feeds to compute a reliable cmETH/USD valuation on Mantle. Without such infrastructure, listing cmETH exposes the protocol to price manipulation, stale valuation, and potentially uncompensated slashing losses.
Given these limitations, we recommend postponing the listing of cmETH on Aave’s Mantle deployment. We advise reassessing the asset once a robust oracle framework is in place and the protocol’s restaking strategy, including risk management and slashing response, is clearly defined.
Specification
| Parameter |
Value |
| Asset |
MNT |
| Isolation Mode |
No |
| Borrowable |
Yes |
| Collateral Enabled |
Yes |
| Supply Cap |
15,000,000 |
| Borrow Cap |
7,000,000 |
| Debt Ceiling |
- |
| LTV |
60.00% |
| LT |
65.00% |
| Liquidation Penalty |
10.00% |
| Liquidation Protocol Fee |
10% |
| Variable Base |
0 |
| Variable Slope1 |
7% |
| Variable Slope2 |
300% |
| Uoptimal |
45% |
| Reserve Factor |
20% |
| Stable Borrowing |
Disabled |
| Flashloanable |
Yes |
| Siloed Borrowing |
No |
| Borrowable in Isolation |
No |
| E-Mode Category |
N/A |
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0
