Welcome back to the second installment of Mantle’s DeFi Uncovered series with Ecosystem Research Team Lead Derek (@0xavarek) and fellow team member Edmund (@Defi_Maestro). This time, they were joined by DeFi BD Team Lead Gabe (@gabrielGFoo) to answer more questions from the Mantle community with a focus on the future decentralized finance (DeFi) landscape.

*Some sentences have been edited for clarity and brevity.

Derek: Quick overview of what we’re going to cover today. The three pillars of this discussion are going to be an overview of the current DeFi landscape, then we’ll discuss the future landscape on Mantle and also beyond, and finally, we’ll answer some key questions from the community. Let’s dive in.

When we talk about the DeFi landscape it’s always about trends and patterns, so what are the top three you see gaining a lot of traction right now?

Gabe: For me the top three trends that I see all over crypto Twitter are Liquid Staking Derivatives (LSDs). The other two that have been popping up lately are RWA, Real-World Assets, and Telegram bots.

Edmund: I think we discussed this previously as well, and I think of those three narratives, Telegram bots play a very interesting role, especially since they lower the barriers to entry. I think in the future we’ll see a lot more of these integrations with bots, so that users on mobile can access applications more easily. I think betting is another interesting vertical with platforms like Rollbit setting a precedent that many protocols might emulate.

D: Why are you guys so bullish on RWAs? What are you looking forward to in that space?

G: I think it opens up the doors for new assets that users outside the U.S. can access, creating a global market for these investment opportunities where everyone can participate. Looking at the stats for the current RWA market, we can see that it’s in the top 10 DeFi categories in ninth place with billions of dollars in value. It’s definitely one of the fastest-growing verticals right now, with leaders such as Centrifuge, Ondo, Maple, and Goldfinch.

I think there will be issues with counterparty risk, like defaults, but that’s part of the nature of any loan agreement in the real world. Having it on-chain makes it more transparent and lowers the barriers to entry. More institutional adoption will require regulatory clarity.

D: What are you guys excited about regarding LSDs, what’s the next big thing in this sub-sector?

E: I think we can look at Pendle as the model of what can be built on top of LSDs, allowing users to speculate on the future yields of LSDs. Moving forward, I think LSDs will gain more traction because of the capital efficiency they allow for stakers. We should see more integrations of LSDs as collateral across all DeFi sectors ,such as perps and options markets. We could see a crossover between RWAs and LSDs because technically anything that has yield and is stakeable could become an LSD.

G: You could even do a mix of the two where you have a stablecoin that’s partially backed by both LSDs and RWAs. That would be interesting to see in a decentralized stablecoin, combining DeFi legos to supercharge your yield effectively. In terms of tokenizing RWAs, for certain assets such as real estate and wine, it’s difficult. A lot of people have tried, but there are problems with custody. Financial instruments like U.S. treasury bills and private credit are much easier to tokenize.

D: Telegram/Discord trading bots are gaining popularity across CT and beyond. Why are you excited about this realm?

E: Trading bots help streamline the process of users participating in DeFi. Currently, you still have to know how to use a wallet, pick the right wallet, and control the private keys of the wallet. With trading bots, users can access all these components on the go. Also, we’re starting to see variations like sniping bots, bots that do regular DeFi-related transactions, and bots that allow you to copy the trade of on-chain addresses that a user inputs. This is just touching the surface of what these can do, and I like how they lower the barriers of access for the average user.

In the future, we may start to see some complex bots. This trend will also allow us to figure out what the barriers to entry are. Importantly, it’ll also make us ask the question, how secure are these bots? What happens if these bots are accessible to third parties or malicious actors? We’re still in the early stages of this emerging trend and need more iterations and considerations. This space is moving fast and is something we’ll be monitoring closely. Hopefully, we’ll see certain integrations on Mantle Network soon.

G: In terms of security, it looks like degens don’t really care much about centralization and other risks. However, there was a big discussion about where the private keys are stored. Effectively, the people who run these bots control all the private keys of every user that sets up a wallet. Unibot recently announced Unibot Cloud, which is trying to bridge the gap between security and superior UI/UX that a bot offers. There’s a lot of risk to using these bots. If you have large funds in these private wallets that you don’t control, in the event that you can’t trust the team, they can pull the rug. Unibot’s in the right direction, they implemented a mechanism that would allow self-destructing messages for private keys that can only be decipherable by the user.

D: What are your thoughts on the GambleFi sector?

E: Inherently, within crypto, we have a large number of people with extremely high-risk appetites. This should translate into many users being attracted to high-risk games and prediction markets. It is somewhat similar to what traders do as well, very speculative regarding prices going up or down. Reliable Oracle providers that allow us to verify all the data and the randomized stuff around various games, alongside integrating with low-cost blockchains like Mantle Network, can truly unlock this opportunity.

Also, when these platforms gain traction, they are pressured to abide by certain regulations and block users of certain jurisdictions. It’ll be interesting to see how and when these platforms deploy permissionlessly and allow everyone to participate. Furthermore, betting on fun games such as hamster racing and other random stuff would help. The composable elements that these apps are using can be improved, enabling secondary apps to build on top of them.

D: Web3 is perfect for something like GambleFi. When you talk of prediction markets, it’s not just betting, there are other use cases, for example, insurance. Let’s say you create binary events to have very highly customized insurance solutions.

D: When it comes to DeFi, what are the gaps that Mantle as a layer-2 (L2) network is trying to fill? What are DeFi users looking for at the moment?

G: Given there are so many L2s fighting for attention right now, it’s important to have the base narratives in place, your DEXs, lending markets, perpetual platforms, essentially all the dApps you’d expect an ecosystem to have. But also, you need a killer dApp — one that can reach mass adoption and bring the largest number of users to Mantle.

E: SocialFi would be interesting and integrate closely with our DeFi ecosystem. SocialFi has yet to pick up traction across the web3 space, and it is something that we’re looking to add to Mantle Network, giving users a sense of belonging.

D: What does Mantle’s future roadmap look like?

G: If you’ve been keeping up with the governance proposals, we can see a big push towards LSDs. Mantle itself will deploy funds with LSD protocols such as Lido. It’s a strategic push towards building LSDFi on Mantle. There are two key focus areas: sustainability and composability. We want to make Mantle the hotbed of innovation. Using LSDs, we want to supercharge yields and develop a highly composable ecosystem.

D: What are some truly innovative dApps that are building on Mantle?

E: Without name-dropping, there are certain dApps with interesting and unique functionalities. RWA-backed stablecoins are an innovative opportunity, and certain dApps are building in this space. Also, composable prediction markets are interesting as well. Obviously LSDs, too, will be further developed within our ecosystem.

G: Certain portfolio management and on-chain fund management protocols are also building that I’m excited about.

As the ecosystem adds more protocols in the future, make sure to stay up to date on our ecosystem page and our X/Twitter to track what you can do on Mantle Network.