DeFi Development on Mantle — DeFi Uncovered Ep. 1 AMA Recap
06/22/239 min read
Mantle Network recently kicked off its Twitter Spaces series: DeFi Uncovered. It also featured two new voices from Mantle, Ecosystem Research Team Lead Derek (0xavarek), and fellow team member Edmund (@Defi_Maestro), who were there to answer questions about decentralized finance (DeFi) from the community.
With over 900 questions submitted, there’s a ton of enthusiasm behind the DeFi sector on Mantle Network, and we’re excited to be giving everyone a behind-the-scenes look at its development. Here’s a recap of the discussion; the full recording can be found on our Twitter.
*Some sentences have been edited for clarity and brevity.
1. How do you translate your personal philosophy as a DeFi user into building an ecosystem on Mantle Network?
E: An ecosystem should be built for the user as well as the protocols. As part of the Mantle team, that means being hands-on with the protocols in terms of streamlining cross-collaboration between sectors that have a lot of synergies — for example, money markets, vaults, decentralized exchanges (DEXs). Increasing the composability across the ecosystem can help solve a lot of pain points for users. Beyond that, having an intuitive UI and making sure users are well informed about the advancements being made within the ecosystem so that they aren’t overwhelmed is also a key focus in ecosystem building.
2. How does Mantle differentiate itself from other ecosystems?
E: I think that’s something that users will have to experience for themselves, but one thing I will dive into is the hands-on approach and level of collaboration between Mantle and the protocols being deployed. Some other ecosystems take a more hands-off approach when it comes to protocols being deployed, but we maintain close collaboration with the protocols building on Mantle Network, helping them align with our overall goals for the ecosystem and trying to remove that information asymmetry between what users want and what’s being built. We also have plans to create a central page where users can track the deployments of new protocols and compare different options to see which one best suits their needs and strategies.
3. What are some DeFi projects being built on Mantle Network, and how is the ecosystem shaping up?
E: Without name-dropping protocols, a substantial number of DeFi projects are building on Mantle Network. The current pipeline includes around 130-140 protocols that are a mix of new and existing projects. The Mantle Grants Program is receiving significant traction, and the team is looking at more and more requests on a daily basis. The mainnet launch will provide a better indication of how many projects are live on day one.
Some of the names who have committed to moving forward with deployment on Mantle Network Mainnet are incredibly encouraging for the team, and the community will be thrilled to learn about them in due time. This will allow us to propagate an inclusive and collaborative DeFi ecosystem. As for the high-impact projects, it’s up to the users to decide, and it’ll depend on the protocol’s marketing activities, how they incentivize their Total Value Locked (TVL) and other factors.
4. As one of the crucial connects to any DeFi ecosystem, stablecoins play an important role. As such, what stablecoins will be deployed on Mantle Network?
E: The major stablecoins that we’ve all become accustomed to will definitely be live on Mantle Network. The staples — USDC and USDT. The team’s working on onboarding other stablecoins as well. Again, without name-dropping, we’re working with various teams to enable certain stablecoins on the network. We’re supporting a mix of decentralized stablecoins, partial-reserve stablecoins, and obviously centralized stablecoins. We have a good number of builders building in this area. Furthermore, liquidity and bridging into and out of Mantle Network won’t be an issue. We want to provide users with a choice in terms of which stablecoin they want to use in a frictionless manner, so we’ll be supporting a whole host of them.
5. What features or essential elements does the DeFi space currently lack?
E: DeFi is still in its early days, and new components of DeFi will come into play as we get regulatory clarity, education for users, and composability with other mechanisms. In terms of what’s lacking, insurance is a major sector that has yet to be tapped into and solved, primarily because no one has been accurately able to judge the risk profiles for premiums to be charged.
There are certain mechanisms that allow dynamic adjustments of the risk profile that is determined by the public, so it’ll be exciting to see protocols that are pushing these boundaries and building in this realm.
DAOs and tooling around building a robust governance framework could see some work.
Unfortunately, regulatory concerns have made this a touchy subject. Interest in DeFi protocols powered by artificial intelligence (AI) is also on the rise, although we’ve yet to see a protocol implement AI effectively. There are many ways a DeFi protocol can implement AI to aid with certain functions. Finally, real world assets (RWA) present a massive opportunity; however, they too are exposed to potential regulatory backlash. As we get regulatory clarity, RWAs are likely to be picked up again, and become a major use case.
6. What is the long-term strategy of DeFi on Mantle?
E: We’ve studied other DeFi ecosystems, and what we’re looking for is longevity. We acknowledge that retail plays a large part in that, but we are proponents of having both retail and institutional money. The goal is to cater to both of these diverse DeFi user bases.
Furthermore, on the technical side, it’s paramount that there’s zero downtime. Because if that isn’t the case, then the confidence in an ecosystem is severely affected. For the long-term strategy, we’re focused on maintaining a user-friendly ecosystem, to foster a strong community.
Interestingly, a lot of ecosystems focus a lot on monetary rewards for the users and builders, but we’re of the belief that this eventually dies down without much to show for it. For Mantle, we want to focus on fostering an engaging community that believes in the ecosystem, participates in governance proposals, and ultimately ensures that the users have a sense of belonging.
From the ecosystem development perspective, we’re making sure that the builders feel aligned with our mission, and that they see longevity in terms of what they’re building on Mantle. The idea is to take their feedback and have constant discussions with them to enable the ideal DeFi ecosystem. Finally, with an upcoming new product Mantle LSD and mntETH, the future roadmap promises to be a game-changer when it comes to our long-term strategy.
7. Where can DeFi-specific educational efforts improve, and how will Mantle play a role?
E: This whole topic is on a wide spectrum of a variety of actions that are taken. It comes from YouTube videos, Twitter threads, spaces, etc. Furthermore, we’ve also seen more hands-on efforts, such as quests, where users are also rewarded for participation. The initiatives also aim to target different sets of audiences, such as onboarding web2 users to web3 or educating native web3 users for new discoveries.
At Mantle, we want to triage the different users and ensure we run targeted educational campaigns to support their learning. So, for example, when it comes to savvy DeFi users, we want to focus on ensuring that proper documentation is available to help them when moving liquidity from other ecosystems to Mantle. The individual protocols will also play a major role in educating users by explaining their tokenomics, protocol mechanics, and other nuances. As for onboarding web2 users to web3, it’s important to package all the DeFi peculiarities in the backend, provide a simplified frontend for them to interact with, and communicate this effectively with minimal jargon.
8. Is DeFi better than centralized finance (CeFi)?
E: Both serve different purposes, and it depends on what the user values. Centralized services are slightly more efficient, as everything’s controlled by a centralized entity. Moreover, the user’s funds are in the custody of a third party, so if they trust the entity, it makes sense. Decentralized platforms are less efficient, due to the introduction of gas costs and fragmented liquidity; however, they allow users to really own their crypto assets. We can’t really conclude that one’s better than the other one, both have pros and cons. It really depends on the user’s individual use case.
9. At a high level, how can we enable better interoperability, seamless integration, and composability between different DeFi applications to create a cohesive UX across the ecosystem?
E: This problem isn’t a one-step solution. At a protocol level, you have to ensure that it has composable elements that can be utilized in secondary protocols — something like what GMX has achieved with their GLP model. We’re looking at protocols that essentially have composability with other protocols.
Furthermore, we’ll help protocols by striking partnerships with protocols they can integrate with. The idea is for the discussions between the protocols to kickstart even before mainnet launch. In that way, we’ll have composable elements from day one. This will also ultimately help users to deploy capital in efficient ways.
10. What is the future of NFTfi?
E: NFTfi is a tricky area. The use cases for NFTs are still majorly under development. NFTs require more real-world use cases and value offerings that are more than just social branding activities.
11. How can ecosystems protect users from DeFi rug pulls and scams?
E: The ecosystem solves these issues with certain tools and actions. With Mantle Network, we’re taking certain steps. For instance, we’re recommending certain smart contract auditors to DeFi protocols building on Mantle Network, who specialize in providing reliable audits and are trustworthy. Furthermore, we study the mechanics of the underlying protocol so that we don’t end up onboarding projects that are too risky in terms of how they’re constructed. We’re well aware of certain models that didn’t work in the past, and thus are keen on avoiding such protocols.
Overall, we want to be proactive in recommending auditors, exchanging dialogues with the team regarding certain protocol mechanisms, and ensuring long-term values are aligned. Finally, we’ll run bug bounties at the ecosystem level and also encourage protocols to run their own bug bounties. These actions will provide a safe environment for the users and protocols alike.
12. What is an ideal DeFi protocol that needs to be built that will further the cause of DeFi by leaps and bounds?
E: An insurance protocol that works properly and solves the current issues will certainly help further the cause of DeFi. Something that’s composable and cross-chain compatible will certainly be interesting. Other than that, protocols experimenting with interesting governance models will be something to keep an eye on.
That’s all for the first installment of DeFi Uncovered, we hope you enjoyed this behind the scenes look at how Mantle’s ecosystem research team is coordinating an extensive and exciting selection of DeFi protocols. Make sure to follow on Twitter and join the community on Discord for info about upcoming Spaces!