Mantle Network Proposal for Incentive Program

The Mantle economic committee recently put forth a proposal aimed at utilizing the Mantle treasury to catalyze increased liquidity for Mantle users. Specifically, the proposal details the deployment of up to 120 million MNT, 120 million USDx, and 41,000 ETH to incentivize applications on Mantle. When combined, this amounts to a potential capital deployment of approximately $240 million in total.

Central to the proposal is an emphasis on liquidity-driven applications. The primary targets of this initiative would be third-party bridges, Real-World Assets (RWAs), and Mantle-native applications like decentralized exchanges and money markets. This focus stems from the overarching objective to enhance execution for traders. Insufficient liquidity is always a bottleneck, especially early on in a protocol’s lifecycle. The $240 million in incentives is certainly one way to solve the problem.

Ecosystem level incentive programs aren’t infallible, though – they come with a mixed track record. Optimism’s track record with incentives proves both sides of the argument. On one end, early incentives played a pivotal role in spurring onchain user activity and boosting total value locked onchain, with Optimism TVL jumping 10x from the $250-300 million range to the $2.5 billion+ range early on.

However, historical data also suggests that once the incentives for specific applications are withdrawn, there is a consequent decline in both activity and TVL. Nevertheless, the silver lining is that the levels tend to stabilize at a point higher than before the introduction of incentives.

Incentives also have the potential to indirectly affect token price by catalyzing increases in onchain yields. We've seen this narrative unfold in other ecosystems such as Canto and Optimism, where rising yields have often (though not invariably) preceded an uptick in native token prices.