Summary
LlamaRisk supports onboarding XAUt to Mantle once sufficient liquidity is bootstrapped and the Chainlink XAU/USD price feed is deployed. Due to declining WETH liquidity since launch, we recommend waiting until liquidity is meaningfully increased before removing WETH from Isolation Mode. We suggest keeping USDT0 (and other stables) collateral enabled only under E-Modes due to low liquidity and risk isolation, while supporting USDT0 as collateral and USDe as a borrowable asset within the Stablecoin E-Mode, as deficit risk is negligible given that both assets rely on the same underlying USDT/USD oracle feed. Additionally, the upcoming Aave v3.7 upgrade will require isolated assets with non-zero LTV, such as WETH and WMNT on Mantle, to be migrated to an alternative configuration.
XAUt
XAUt on Mantle is deployed as L2UpgradeableERC20 and has a total supply of ~4,995 ($25.9M) as of February 27, 2026, representing approximately 0.7% of XAUt supply of 713K across all supported networks. The asset can be bridged from Ethereum Mainnet via the Mantle: L1 Standard Bridge Proxy, where the tokens remain locked on Ethereum and are made available on Mantle through a lock-and-mint mechanism. The core issuance logic remains on Ethereum, as detailed in our prior assessment.
Liquidity
Currently, there is only a single liquidity pool for XAUt on Mantle, namely Fluxion XAUt/USDT0, with ~$220 in TVL. This level of liquidity is insufficient, and a stronger liquidity commitment would be required to support the onboarding of XAUt to Aave and ensure the proper functioning of market operations such as liquidations.
Technological & Counterparty Risk
The XAUT technological and counterparty risks on Mantle, including smart contract risk, bug bounty program, dependency, and legal risks, remain unchanged since our XAUt Ethereum onboarding review and are excluded here for brevity.
Access Control Risk
Unlike Ethereum, a role-based access control mechanism is used for XAUt on Mantle for sensitive functions:
| Controlling Addresses | Role | Functionality |
|---|---|---|
| TimelockController | DEFAULT_ADMIN_ROLE |
Can grant/revoke any role |
| Multisig A | BLOCKLIST_MANAGER_ROLE |
Can add/remove users to the blocklist |
| Multisig A | PAUSER_ROLE |
Can pause the contract |
| MantleSecurityMultisig | UNPAUSER_ROLE |
Can unpause the contract |
| TimelockController | UPGRADER_ROLE |
Can upgrade the implementation contract |
A 1-day (86400 seconds) delay has been implemented for XAUt contract upgrades on Mantle via the TimelockController, which has the following role-based access control:
| Controlling Addresses | Role | Functionality |
|---|---|---|
| TimelockController | ROLE_ADMIN |
Can update roles, including the role admin role itself |
| MantleSecurityMultisig | EXECUTOR_ROLE |
Can execute all proposals, including role updates |
| MantleSecurityMultisig | PROPOSER_ROLE |
Can schedule proposals, but can not schedule role updates |
| MantleSecurityMultisig | CANCELLER_ROLE |
Can unschedule proposals, but can not unschedule role updates |
The wallets controlling XAUt on Mantle are:
- TimelockController: Admin of the XAUt contract.
- Multisig A: 3/8 threshold Safe, likely controlled by Tether.
- MantleSecurityMultisig: 6/14 threshold Safe, controls TimelockController and holds unpauser role for XAUt ERC20.
Price feed Recommendation
We recommend using the Chainlink XAU/USD feed to price XAUt, consistent with the configuration on Mainnet and Plasma. However, this feed is currently unavailable on Mantle.
E-Mode Changes
- We do not recommend enabling USDT0 and other stablecoins as collateral under the general reserve configuration due to limited onchain liquidity and risk isolation. Currently, the USDT0/USDT pools on Merchant Moe and Agni primarily facilitate USDT0 to USDT migration, and no other trading pairs with meaningful liquidity are supported. However, we support enabling USDT0 as collateral within the Stablecoin E-Mode alongside USDe as a borrowable asset, as deficit risk is negligible given that both assets rely on the same underlying oracle feed (USDT/USD).
- WETH was initially onboarded via Isolation Mode due to limited liquidity at launch, with WETH to stable swaps requiring routing through multiple pools. The Mantle team had indicated that liquidity would be increased over time; however, current WETH to USDT0 swap liquidity at 5% slippage is roughly $510K and has declined since launch. As a result, we recommend keeping WETH collateral usage constrained until WETH/stable pools are further bootstrapped.
Source: Odos, February 27, 2026
- Onboarding XAUt as LTV0 outside its dedicated Stable E-Mode category (USDT0, USDC, GHO as borrowable), combined with restrictive supply caps, would achieve a level of risk isolation similar to an Isolation Mode setup with a debt ceiling. However, current XAUt liquidity is almost non-existent, and we recommend postponing onboarding until additional liquidity is bootstrapped.
- An additional consideration is that v3.7 removes support for Isolation Mode, requiring all assets currently configured with non-zero LTV and a debt ceiling under Isolation Mode to be migrated. On Mantle, this specifically affects WETH ($73.7M supply) and WMNT ($1M supply). Constraining risk for WETH without a debt ceiling would be challenging, given the limited liquidity, as reducing supply caps would also limit the amount of WETH that can be borrowed.
The new E-Mode parameters will be aligned and presented jointly with @ChaosLabs.
Disclaimer
This review was independently prepared by LlamaRisk, a DeFi risk service provider funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.