Table of Contents

1.Introduction: Rebranding Mantle to Become an On-Chain Financial Hub

2. Mantle’s Financial Products: Designed for Institutional Investors and Retail Users
2-1. Enhanced Index Fund – Aiming to Become the Benchmark for Crypto Investments
2-2. Mantle Banking – The all-in-one Web3 neo-bank, as simple as ‘Toss’
2-3. Function’s BTCFi – Expanding Bitcoin holding strategies into DeFi

3. Mantle’s Technological Evolution Toward On-Chain Finance for Everyone
3-1. Privacy finance perfected via a Succinct-based ZK transition
3-2. Simplified multi-chain UX via Bungee-based Chain Abstraction

4. Driving Community and Ecosystem Growth with AI and NFT Innovations
4-1. The next stage of DeFi is AI – Unfolding the DEFAI narrative with MantleX
4-2. Content-based community strategy powered by NFT and Kaito

5. Final Thoughts – Envisioning an On-Chain Financial Hub That Integrates Technology and Community

1. Introduction: Rebranding Mantle to Become an On-Chain Financial Hub

Mantle originated with BitDAO—a global DAO project led by Bybit—and has since established itself as one of Ethereum’s premier Layer 2 networks. For a deeper understanding of Mantle’s history and fundamental structure, readers may refer to the Xangle Research Report from one year ago here. In this report, we focus on how Mantle’s DeFi ecosystem has grown over the past year and explore how Mantle is shaping its future vision of “on-chain financial services for both institutions and the masses.”

1) The established Mantle DeFi ecosystem

Mantle has concentrated on building its DeFi ecosystem by leveraging not only its native network but also core products such as the liquid staking asset mETH. From early 2024 with a TVL of $340.65 million, TVL surged to $2.36 billion by year-end. Mantle’s initial bootstrapping of the DeFi ecosystem via the mETH strategy—integrating with a wide array of AVS such as EigenLayer, Karak, and Symbiotic and further interfacing with external protocols like Pendle, HyperEVM, and HL‑Eco—has proven both its revenue potential and practical utility, elevating mETH to the 4th rank by liquid staking TVL within only one year. Moreover, cmETH—the liquid restaking asset derived from mETH—has reached 5th place in Ethereum’s liquid staking TVL, while the governance token $COOK, introduced via the Methamorphosis season campaign, has also garnered significant attention.

The mETH and cmETH services, consistently delivering competitive yields through integration with numerous AVS, have driven persistent usage of the Mantle chain. In addition to Mantle’s proprietary products, various DeFi projects such as Merchant Moe, Treehouse, Stargate, and Pendle have continued to generate steady transaction volume, substantiating the ecosystem’s sustainability. As evidenced by the transaction trends below, unlike other chains that see drastic drops after specific events, Mantle has maintained consistently high transaction levels over the course of an entire year—demonstrating that its TVL remains robust and that the Mantle chain is continually chosen by users.

2) Infrastructure improvements as an Ethereum L2

Mantle is not solely focused on providing attractive yields in DeFi but is also upgrading its overall technological infrastructure to secure its position as a competitive Layer 2 solution. By replacing its proprietary data availability layer, MantleDA, with EigenDA, Mantle has completed a modular architecture that enhances data processing speed by 234×, improves censorship resistance by 20×, and significantly reduces fees. In addition, the adoption of ZK technology through Succinct, the implementation of chain abstraction via Bungee, and participation in Chainlink SCALE have further bolstered the efficiency and reliability of DApp development and operation. Particularly, the introduction of RIP-7212 (P256)-based precompiled contracts now allows for easy user authentication via biometric methods such as fingerprint or Face ID, offering a familiar and intuitive experience even for Web2 users.

Building on these on-chain achievements, Mantle is now accelerating its next growth phase—“connecting with traditional finance.” With the U.S. SEC approving Bitcoin and Ethereum spot ETFs in 2024 and with renewed expectations for regulatory easing driven by the re-election bid of former President Trump and a pro-crypto stance from the GOP, digital assets are finally being recognized as a formal asset class. Global institutional investors are in search of platforms that offer a genuine profit structure and transparent governance, and Mantle is seizing this opportunity to evolve beyond a mere Layer 2 solution into a “comprehensive on-chain financial hub.”

The performance and technological evolution outlined above have set the stage for Mantle to leap from a simple Layer 2 solution into a comprehensive on-chain financial hub—one that truly connects traditional finance with DeFi. To achieve this, Mantle has restructured its ecosystem around six pillars of innovation: 1) Mantle Network, 2) mETH Protocol, 3) Function (ƒBTC), 4) Enhanced Index Fund, 5) Mantle Banking, and 6) MantleX. This integrated infrastructure, reminiscent of the growth strategies employed by large conglomerates expanding into traditional finance and AI, combines existing infrastructure and DeFi to create a unified platform. With such structural flexibility and the combined operational strength of its technology, assets, and community, Mantle aims to not only expand the practical use of digital assets but also provide financial products that institutional investors and traditional finance players can rely on.

2. Mantle’s Financial Products: Designed for Institutional Investors and Retail Users

2-1. Enhanced Index Fund – Aiming to Become the Benchmark for Crypto Investments

The service launched by Mantle to target institutional clients is the Enhanced Index Fund. In traditional finance, an index fund is a well-known investment product that holds a basket of stocks rather than investing in individual stocks; a prime example being the S&P 500 Index. Unlike in traditional markets—where index funds have steadily increased their market share due to low fees and relatively higher performance compared to active funds—investment in the crypto market typically involves investing in individual coins. This is largely because Bitcoin holds a dominant share and altcoins tend to follow Bitcoin with a high beta, diminishing the effectiveness of an index fund that aggregates multiple cryptocurrencies.

In this context, Mantle has introduced the Enhanced Index Fund to usher in a new trend. Instead of including a wide array of coins as underlying assets, the goal is to mirror a crypto market index using major coins such as BTC, ETH, and SOL, while optimizing the risk-reward profile through DeFi activities based on stablecoins like eUSD and AUSD. The aim is not to simply construct a traditional index fund that holds a basket of coins, but rather to create a fund that pursues stable, risk-adjusted returns via a DeFi strategy. In particular, for institutional investors constrained by compliance risks in their DeFi participation, this fund is designed to serve as a solution through a fund product.

This fund will operate as an open-end fund established in the British Virgin Islands (BVI), with Mantle actively participating as the fund manager. An initial anchor investment of $400 million from the Mantle Treasury will supply liquidity to reduce entry barriers for early adopters. Technically, the fund is tokenized on-chain and is expected to evolve into a tokenized index fund called “MI4 (Mantle Index Four)” in the future. The fund’s assets can be integrated with various DeFi strategies—such as restaking, LP provision, and collateralized lending—to generate stable returns. Although meeting the stringent requirements of sophisticated institutional investors while offering attractive yields is no small feat, the Mantle Enhanced Index Fund is likely to undergo an initial phase of validation of its strategy. Ultimately, if this fund can serve as a bridge for on-chain inflows of institutional capital, it may act as a catalyst for establishing DeFi-based index fund management as a new investment standard in the crypto market.

2-2. Mantle Banking – The all-in-one Web3 neo-bank, as simple as ‘Toss’

A neo-bank is a bank that delivers all banking services via digital platforms (primarily mobile apps or online interfaces) without physical branches. Customers can handle account opening, remittances, payments, and loans through an application, and these services are designed to maximize user experience by leveraging technology and data. In this vein, Mantle Banking aims to be a neo-bank platform that bridges the gap between fiat currencies and DeFi.

Mantle Banking is designed to allow users to manage both fiat and crypto assets from a single account, blurring the line between traditional finance and on-chain DeFi through a user-centric interface. With Mantle Banking, users can receive their salaries in fiat, which is then automatically converted into stablecoins (such as sUSDe) or allocated into the MI4 fund, while also having the option to secure loans with collateral in ƒBTC or mETH, among other functions—all through a single app. By offering a simple UX reminiscent of Toss along with a DeFi engine that provides various revenue-generating functions, Mantle Banking seeks to offer a Web3 financial utility that’s accessible to everyone without the need for complex DeFi onboarding.

Should Mantle Banking be fully implemented, it could become a strategic turning point that drives the expansion of the Mantle ecosystem—far beyond just another new product. In Web2, Toss—one of the leading neo-bank models—started with simple remittance services and evolved to offer a seamless experience that connected banking and securities. Toss managed to outpace decades-old competitors and, within just three years of launch, captured the top spot for overseas stock trading, thereby transforming the domestic financial landscape. Similarly, Mantle Banking is optimized for the on-chain environment using a comparable strategy. It aims to leverage automated financial functions based on user data analysis to seamlessly integrate into the daily lives of Web3 users.

This vision is rooted in Mantle’s DNA and reflects successful benchmarks set by industry leaders. For instance, Bybit—Mantle’s largest investor and a key early supporter—has already undertaken various initiatives connecting real-world financial touchpoints, such as experiments with Mastercard-based physical cards, on-ramp systems, and automated fiat conversion payment solutions. These initiatives confirm that there is a significant demand for integrating cryptocurrency into everyday financial transactions. Additionally, Robinhood’s strategy of unifying traditional assets with cryptocurrency through asset tokenization and automated investment structures has served as another crucial point of reference for Mantle. Robinhood’s approach lowered users’ financial entry barriers, and Mantle Banking is following a similar path by moving beyond simple payments toward an integrated model for investing and asset management.

Mantle Banking represents an on-chain neo-bank model that merges the seamless, mobile-first user experience found in top Asian fintech platforms such as Korea’s Toss—with its streamlined interface and integrated financial services—with the crypto-to-real-life connection strategies pioneered by Bybit and Robinhood. It is not merely about launching a new technical product; it’s a strategic declaration that Mantle aims to evolve into a comprehensive on-chain financial platform that encompasses everything from user interface and asset management to everyday consumption. If the Mantle Banking model succeeds, this new financial UX paradigm—an "on-chain neo-bank"—could rapidly proliferate across various chains and ecosystems, spurring both mass adoption of Web3 finance and the entry of institutional capital.

2-3. Function’s BTCFi – Expanding Bitcoin holding strategies into DeFi

Lastly, an area that Mantle considers crucial is the Bitcoin ecosystem. In the current crypto market, where Bitcoin commands roughly a 60% market share, this segment represents a market that Mantle cannot overlook. Mantle is tapping into this market through a Bitcoin product service known as Function. Function is a BTCFi protocol that transforms Bitcoin from a mere holding asset into a productive asset that can be deployed in a variety of on-chain financial strategies. Mantle’s Bitcoin product, originally operated under the name ƒBTC, underwent rebranding to launch as Function, significantly enhancing its structure in terms of network scalability, security, and accessibility. The tokens issued by Function (ƒBTC) are natively integrated across more than eight chains—including Ethereum, Arbitrum, and Mantle—providing higher liquidity and capital efficiency than the conventional manual wrapping model used by wBTC. Currently, the TVL of ƒBTC stands at approximately $1.2 billion, with more than 15,000 BTC deposited on-chain.

Function’s architecture employs a hybrid approach that considers both decentralization and security. When users deposit BTC into a designated custodial address provided by Function, off-chain MPC (Multi-Party Computation) nodes use a Threshold Signature Scheme (TSS) to issue ƒBTC. These ƒBTC tokens can be automatically burned and reissued on-chain, offering higher trust and scalability than traditional custodial wrapping methods. Users can then use these tokens as collateral to participate in lending, yield farming, or restaking strategies, and they can also generate tangible returns through integrations with platforms such as Babylon, Solv, and PumpBTC. In this way, Function transitions Bitcoin from a passive holding asset to an active gateway for DeFi inflows.

What makes Function particularly notable is the recent global trend of companies and nations accumulating Bitcoin as a strategic reserve asset. For example, MicroStrategy has secured over 520,000 BTC for financial diversification—a trend that is leading to increased demand for diversified Web3-based portfolio strategies through corporate accounts. Alongside major nations like the U.S. and China, even local governments are looking to secure Bitcoin as part of their strategic reserves. As institutional and governmental entities seek solutions that not only hold Bitcoin but also generate tangible revenue from it, Function emerges as a structural solution that directly addresses this demand. In particular, following the SEC’s approval of spot Bitcoin ETFs at the end of 2024, interest and demand for on-chain BTCFi strategies have accelerated.

Mantle’s Function is positioned to be the linchpin driving BTC inflows and liquidity provisioning. More than just offering a wrapped asset, Function is set to become a reliable bridge that connects global institutional and governmental Bitcoin management strategies with DeFi. This, in turn, is expected to catalyze the on-chain inflow of institutional capital into the Bitcoin market and establish a virtuous cycle within the Mantle ecosystem.

3. Mantle’s Technological Evolution Toward On-Chain Finance for Everyone

3-1. Privacy finance perfected via a Succinct-based ZK transition

https://www.mantle.xyz/blog/announcements/mantle-network-advances-technical-roadmap-as-the-first-zk-validity-rollup-with-succincts-sp1

Mantle Network is shifting away from the traditional optimistic rollup structure toward a ZK Validity Rollup—marking a full-scale innovation in performance and security—starting this year. The core partner for this transition is Succinct’s SP1, which modularizes the ZK proof system. With SP1, Mantle aims to simultaneously achieve three technical goals: transaction finality in under one hour, lower costs, and enhanced security. While optimistic rollups required a 7-day waiting period for users to withdraw funds, ZK validity proofs provide mathematical confirmation of transactions without such delays. For users, this means faster asset utilization, while DeFi protocols benefit from increased asset turnover and more precise liquidity strategies.

Mantle has also ensured that the developer experience is not compromised by this ZK transition. Through collaboration with Succinct, Mantle maintains compatibility with the existing OP Stack—allowing developers to continue using Solidity-based smart contracts and tools. The computational bottleneck typically associated with ZK proofs is distributed via the SP1 Prover Network, and data availability is reliably secured by leveraging the existing EigenDA solution. As a result, Mantle can offer the high security and finality of a ZK-based system at much lower transaction fees than before. The combined implementation of the ZK Validity Rollup, OP Stack, and EigenDA positions Mantle as one of the first examples of a blockchain that truly balances scalability and trustworthiness. Although ZK technology currently incurs higher costs in the proof generation process and may offer lower scalability compared to other chains, Mantle has chosen to adopt it gradually while monitoring technological advancements.

Despite these challenges, the need for ZK is evident, as this technology could become a critical factor in elevating Mantle to the intersection of traditional finance and DeFi. In conventional blockchains, all transaction and asset holdings are transparently public, which can expose sensitive strategies to financial institutions and large investors. In contrast, ZK Validity Rollups prove the accuracy of transactions while keeping detailed information private, making them highly applicable in traditional finance scenarios where privacy and security are paramount. Therefore, Mantle’s adoption of ZK rollups represents not just a technological upgrade, but an important pivot toward financial infrastructure that institutional players can confidently utilize.

3-2. Simplified multi-chain UX via Bungee-based Chain Abstraction

Currently, various blockchains and applications operate in isolated silos, forcing users to undergo cumbersome processes whenever they transfer or utilize assets. For instance, moving assets from Ethereum to Arbitrum and then to Mantle involves multiple complex steps (bridge → swap → final transfer) and each chain comes with its own fees, associated wallets, and services—posing a significant burden for users unfamiliar with the process. Mantle’s strategy to solve this is through Chain Abstraction. With chain abstraction, users no longer need to worry about which chain their assets reside on. Instead, they simply set a basic objective like, “I want to send these assets to Mantle for staking,” and the system automatically determines the fastest and most cost-effective route to transfer the assets. It’s similar to making a payment without needing to know which specific card network is used.

To implement this, Mantle has integrated an infrastructure known as Bungee. With just one click, users can seamlessly convert assets from multiple chains—such as Ethereum and Arbitrum—into Mantle’s mETH or cmETH, streamlining complex DeFi operations into a single interface. Whereas previously bridging and swapping had to be handled separately, Mantle now automates the entire process. Furthermore, Mantle is incorporating the ERC-7683 standard along with an intent-based system. When a user inputs a simple goal such as “I want to receive a certain asset,” the system automatically computes and executes the optimal transfer route behind the scenes. Although the underlying computations consider various chains and liquidity sources, users enjoy a unified experience, managing all their assets from a single wallet effortlessly.

This structure not only streamlines the process but also drastically lowers the entry barrier for on-chain experiences. Historically, moving assets and executing strategies on blockchains was extremely complicated—with varying rules and UIs across chains, making it challenging for new users to get started. Mantle’s chain abstraction system creates an environment where users don’t even need to be aware of the underlying chains, offering a natural and intuitive experience akin to traditional internet services. Moreover, by adopting RIP-7212, which supports secp256r1-based signature verification, Mantle is establishing a foundation for Web2-level UX through social logins and passkey-based wallet creation. Essentially, it is building a blockchain infrastructure that anyone can use.

4. Driving Community and Ecosystem Growth with AI and NFT Innovations

4-1. The next stage of DeFi is AI – Unfolding the DEFAI narrative with MantleX

With the advent of ChatGPT, the AI era has truly taken off, ushering in a trend often dubbed the "Year of Agents" and driving the convergence of blockchain and artificial intelligence. AI agents operating on the blockchain are now being recognized for playing vital roles beyond simple chatbot functions — they are actively involved in trading, research, and community management. Major projects such as AIXBT, Virtuals, LUNA, and ai16z have gained immense popularity within the community, and the next-generation AI agents built on these foundations are establishing themselves as killer use cases.

In this evolving environment, Mantle is not merely adopting new technology; it is fully committing to a roadmap for an AI-centric ecosystem. As one of the six key pillars in the current rebranding, MantleX is the organizational arm responsible for strategizing and deploying various AI agents throughout the Mantle ecosystem. MantleX aims to go beyond the notion of simply attaching tokens to LLMs for meme coins. Instead, it seeks to build a sophisticated AI infrastructure that takes into account actual financial strategies and drives ecosystem growth. This productivity-driven approach is the core competitive edge that differentiates MantleX from early AI agent platforms designed primarily for speculation.

A prime example reflecting MantleX’s vision is the DEFAI trading platform Funny Money. Initially a meme coin-based project founded by a developer from Pump.fun, Funny Money secured grants from Mantle and BitDAO, enabling it to evolve into a full-fledged AI platform. It now offers a range of integrated features—including a token launchpad, perpetual trading, DEX services, and AI agent execution—through a user-friendly interface that allows anyone to create and deploy AI agents with just a few clicks. Notably, events like the “FUNNY AGENTS CONTEST,” trading competitions, and the $PILL token reward system have combined memes with community engagement to generate widespread popularity.

Additionally, the INFINIT Terminal is designed as an AI interface within the Mantle ecosystem that allows users to execute DeFi investments using natural language commands. For example, a user could simply say, “Deposit one cmETH into the INIT of the Mantle Network,” and the platform would effortlessly carry out the complex DeFi transaction. Users can also earn rewards called “INFINIT Stones,” positioning the terminal as a gateway that offers automated financial experiences for newcomers to DeFi on Mantle.

4-2. Content-based community strategy powered by NFT and Kaito

Mantle is experimenting with community-building strategies that go beyond the traditional issuance and sale of NFTs by focusing on content and user engagement. For instance, Petra Voice’s BOYS NFT is designed as a profile picture (PFP) that allows Mantle users to project their identity and a sense of belonging. While the initial minting price was 111 MNT (approximately $133), the BOYS NFT demonstrated strong vitality through community-based engagement and continuous trading, eventually setting an all-time high of 390 MNT (approximately $413) and establishing itself as a flagship NFT model for the Mantle community beyond a short-lived trend. This success has been mirrored in subsequent projects; for example, the free mint model Just a Boy achieved over 650,000 mints with more than 10,000 unique holders, drawing attention even from Mantle community members who had not previously engaged with BOYS, thanks to its low entry barrier and network-level gas sponsorship.

https://www.mantle.xyz/blog/announcements/yapperboard-challenge-1

Another representative example highlighting Mantle’s commitment to community and social engagement is the introduction of the Mantle Yapper leaderboard by Kaito. By analyzing user activities on X, Kaito has become an indispensable service platform for Web3 social marketing, gauging how much individual users contribute to projects. Mantle quickly onboarded several Post-TGE projects to Kaito, encouraging social activity on Twitter within the community. Users featured on the leaderboard receive incentives such as $MNT rewards to further stimulate active participation.

5. Final Thoughts – Envisioning an On-Chain Financial Hub That Integrates Technology and Community

Over the past year, Mantle has successfully established itself in the market as an Ethereum Layer 2 solution. Now, it is poised to evolve beyond a mere L2 to become an “on-chain financial hub” that organically integrates finance, technology, and community. Mantle is currently envisioning an index fund—one that has been time-tested in traditional finance—and rapidly coupling a neo-bank model aimed at the masses with on-chain solutions to deliver truly meaningful investment products. In addition, by leveraging ZK rollup transitions and chain abstraction technologies, Mantle is strengthening infrastructure security and efficiency, thus laying down a solid foundation for the inflow of global institutional investors.

At the same time, Mantle’s unwavering commitment to the core values of Web3—its community and Degens culture—remains one of its biggest strengths. With its AI-powered automation strategy led by MantleX and a community rewards structure anchored by initiatives such as Yap Club and BOYS NFT, Mantle effectively attracts and retains a dedicated fan base and core users even amidst a DeFi environment dominated by short-term profit seekers. In this way, Mantle stands out as one of the few projects that seamlessly combines a compelling narrative with technological prowess and execution ability, appealing to both traditional finance and crypto-native participants.

Of course, whether the index fund can ultimately provide attractive returns and offset institutional risk concerns will only be proven once the product hits the market. Similarly, while the neo-bank model aims to break down the psychological barriers Web2 users face in adopting Web3 services—a challenge that has stymied many Web3 projects—the path ahead is not without difficulty. Nevertheless, the market Mantle is targeting is vast and holds significant potential. If, by 2025, even a fraction of that potential is realized, Mantle could emerge as the beneficiary of institutional capital inflows and the broader mass adoption of Web3. Mantle’s challenge is certainly one worth watching.