[ARFC] Onboard MNT, mETH, cmETH as collateral assets on Aave v3 Mantle Instance

Apr 17, 2025

This is an archive of our post on Aave governance forum. Read the full thread here.

Summary

As this ARFC onboards 3 assets at once, LlamaRisk has conducted 3 separate asset reviews. Each is detailed in full below.

WMNT

LlamaRisk supports listing WMNT on Aave. MNT—the token wrapped by WMNT—serves as Mantle’s gas and governance tokens. Its L1 contract is controlled by a 6‑of‑13 multisig that can mint up to 2% of supply annually and transfer ownership without a timelock. The base token has an OpenZeppelin audit, yet the wMNT wrapper diverges from canonical WETH, is unaudited, and lacks bug‑bounty coverage.

Liquidity is constrained. A single $2.5 M swap moves price about 10%, far shallower than other L2 gas‑token markets, and nearly all depth sits in two USDe pools (Merchant Moe and Agni) funded almost entirely by Mantle Treasury. Although withdrawals require a DAO vote, this concentration could still trigger a sudden liquidity shock and hinder liquidations.

Given these access‑control, contract, and liquidity risks, WMNT should launch with low supply and borrow caps, tight liquidation settings, and periodic reviews that scale exposure only as Mantle decentralizes and market depth improves.

mETH and cmETH

LlamaRisk recommends postponing the onboarding of mETH and cmETH until Mantle’s liquidity and overall maturity improve. A 200 mETH swap moves the price by more than 5%, while 150 cmETH results in about 20%; most depth sits in a single Merchant Moe pool, and one address supplies nearly 80% of cmETH liquidity. Although Ethereum mainnet holds roughly three times more volume, that liquidity would still need to be bridged before it could backstop Mantle‑side liquidations.

Both tokens are governed by custom, un‑timelocked 6‑of‑13 multisigs whose relationship to the largely unused COOK governance token remains opaque. mETH has five audits and a $500K Immunefi bounty, but cmETH lacks a bounty and adds extra restaking complexity through PositionManagers, EigenLayer, Karak, Symbiotic, and off‑chain reward handlers.

Until on‑chain depth expands significantly and governance protections mature, listing these assets would expose Aave to outsized market and counterparty risk.

Detailed assessments

MNT Review

1. Asset Fundamental Characteristics

1.1 Asset

wMNT is an ERC20-compatible representation of the native MNT token at address 0x78c1b0C915c4FAA5FffA6CAbf0219DA63d7f4cb8. This contract was deployed in July 2023, close to when the network went live. This asset similarly wraps the native MNT token to how WETH wraps ETH, allowing it to be used in smart contracts. MNT is the native token of the Mantle network, which is used to pay for gas on the L2. In this way, it, too, is analogous to ETH on Mainnet. This network-specific native asset class and the wrapper are widely onboarded across Aave instances.

1.2 Architecture

Users may wrap MNT or unwrap WMNT at any time 1:1 and zero cost. This makes the wrapped asset essentially analogous to MNT. MNT is the native gas token of the Mantle network and is used to vote in Mantle governance.

1.3 Tokenomics

This asset is a 1:1 wrapper of $MNT, so it inherits its tokenomics. The $MNT token started as $BIT, which was migrated to $MNT on the launch of the Mantle network. Half of $ MNT’s 6,219,316,794 supply is circulating, with the other half held in Mantle DAO’s treasury.

1.3.1 Token Holder Concentration

Source: WMNT Token Holder Distribution, MantleScan, April 11th, 2025

WMNT is highly concentrated, with four addresses controlling almost 80% of the supply. When looking at these holders, these large holders are smart contracts. The leading holder is a Merchant Moe liquidity pool, the second largest is an AGNI pool, and the third largest is a Lendle lending pool. This reduces the risk somewhat, as these large holders are not owned by individual EOAs that may exit in size rapidly.

2. Market Risk

2.1 Liquidity

Source: wMNT-USDT swap, Odos, April 11th, 2025

Neither WMNT nor MNT is highly liquid, with a $2.5M trade resulting in almost 10% price impact. This presents a risk to Aave and results in a constrained supply cap recommendation.

2.1.1 Liquidity Venue Concentration

As detailed above, much liquidity is held on either Agni or Merchant Moe. Most of this route is equally balanced between the two DEXs and routed largely through USDe. This presents risks regarding whether USDe liquidity should dry up or whether these DEXs should suffer an incident under which they no longer function. This asset’s generally low liquidity level presents a risk to Aave.

2.1.2 DEX LP Concentration

WMNT LP concentration is very high, with the majority supplied by just two EOAs across the two main pools. This concentration poses a significant risk, as a sudden withdrawal by either entity could trigger a liquidity shortfall. Below is the breakdown (as of April 17, 2025):

Merchant Moe USDe/WMNT ($7.7M TVL): 100% of the pool’s liquidity is supplied by an EOA. Mantle’s treasury controls this EOA.
Agni Finance USDe/WMNT ($5.7M TVL): The top liquidity provider is another EOA, holding 99.99% of the pool’s liquidity. Mantle’s treasury also controls this address.

The nature of these addresses (DAO treasury) means that liquidity is unlikely to be pulled, but given that it is theoretically possible that it may risk is still present. This liquidity would likely only be removed after a lengthy DAO approval process, giving Aave sufficient time to adjust markets accordingly.

2.2 Volatility

Source: Mantle Token, Coingecko, April 11th, 2025

Mantle and WMNT experience an elevated level of volatility, with large swings within a relatively tight $1.50 to $0.25 range being documented. Large intraday price increases and drops are displayed, indicating high volatility.

2.3 Exchanges

Source: Mantle Token, Coingecko, April 11th, 2025

Mantle is available on a wide number of Asia-based centralized exchanges. It enjoys significant volume.

2.4 Growth

Source: Mantle Token, Coingecko, April 11th, 2025

Mantle’s market capitalization has maintained a ±$2B valuation for its duration, with some volatility in between. It is a direct function of the token’s price, as new tokens are not being introduced through inflation.

WMNT has an onchain market capitalization of 22.5M MNT, which has been slowly increasing as Mantle’s DeFi network continues to mature.

3. Technological Risk

3.1 Smart Contract Risk

No smart contract audits are documented for WMNT. There are substantial contract differences between WETH and WMNT. Smart contract risk is, therefore, difficult to verify, meaning it is moderate on the MNT contract on ETH L1, the OpenZeppelin audited deployment, which found only low severity issues. This lowers smart contract risk.

3.2 Bug Bounty Program

No bug bounty program for WMNT or MNT is detailed.

3.3 Price Feed Risk

An MNT/USD Chainlink feed is available. It is a market price feed. Since WMNT and MNT are 1:1 redeemable at all times for free, this is a suitable oracle for this use case.

3.4 Dependency Risk

The wrapper contract for this asset is the sole dependency introduced by adding WMNT. MNT is a core pillar of the Mantle network, so its use as collateral on Aave presents a limited incremental risk to the protocol. If Aave is deployed on Mantle, it already assumes significant dependency on the network and, therefore, the MNT token. The incremental dependency risk posed by MNT itself is, therefore, low.

4. Counterparty Risk

4.1 Governance & Regulatory Risk

MNT is both the native gas token of Mantle Network and the governance token of the Mantle DAO. The overall governance framework is described in MIP‑31, yet practical participation is still light, with major decisions to date centering on high‑profile proposals such as the Enhanced Index Fund in MIP‑32.

Despite having a published structure, the documentation does not delineate which subjects must be decided by token‑holders and which remain at the discretion of the core team. Nor is there a well‑defined mechanism for token‑holders to originate and shepherd new proposals through the process. This lack of clarity leaves room for unexpected policy shifts or governance deadlock. Either scenario could impair the perceived utility and, therefore, the market value of MNT—and, by extension, WMNT—introducing collateral risk to Aave if the token is abruptly repriced.

The legal analysis conducted as part of Aave v3’s initial deployment review ([ARFC] Deploy Aave v3 on Mantle - #3 by LlamaRisk) is still valid. To strengthen our regulatory assessment, we have requested from Mantle any legal opinions, non‑action letters, or comparable confirmations regarding MNT, mETH, and cmETH. Once these materials are received, our team will evaluate them and circulate the findings to all relevant stakeholders.

4.2 Access Control Risk

The WMNT contract does not employ access controls. The MNT mainnet token contract (where the token was deployed) employs access controls on critical token parameters.

4.2.1 Contract Modification Options

The MNT contract owner may modify the following functions:

Contract ownership
Token supply via minting additional tokens within a yearly mint cap (hardcoded to <2% of existing supply)

These are significant potential changes that may result in the value of an individual token being repriced rapidly should they be utilized without due process and clear communication.

4.2.2 Timelock Duration and Function

No timelock is documented on the MNT contract. This presents risk given the above change capacities - especially upgradeability.

4.2.3 Multisig Threshold / Signer identity

The MNT contract is owned by a 6/13 Safe with the following signers:

Given the large number of signers with a non-majority threshold and the lack of timelock on a contract with significant modification options, it is fair to say that MNT (not WMNT) has significant access control risk.

mETH Review