Sirwin
Sirwin

Stratum Exchange - The Native Liquidity Layer On Mantle

By PVM | Mind Puzzle | 4 Mar 2024


This is my first dive into the Mantle Network, as I explored Stratum Exchange... the native liquidity layer on the network. PVM what are you doing on Mantle? Will answer this question after I will formally introduce the project and share some intel.

Stratum Exchange is a native liquidity hub built as a public good to drive TVL and user acquisition to the Mantle ecosystem. Taking inspiration from Solidly and Velodrome, Stratum utilizes the ‘vote escrow’ NFT (veNFT) model, to deliver a protocol on which the projects building on Mantle to derive sustainable liquidity for their tokens and enable users to transact in a cost effective and frictionless manner.

The Stratum LP APR for stablecoins is close to 100 %, so this could be a top options for my mUSD, USDC and USDT. The amazing return on stablecoin farming and trading is the result of the best execution for mUSD than any other DEX on Mantle.

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Initially Stratum was supposed to launch on zkSync, but Mantle was a more suitable option. Why Mantle? Two main reasons, because Mantle is one of the best capitalised Layer 2 chains being incubated by ByBit enabling a robust ecosystem of diverse projects for users to experience and a rich set of partners for Stratum's liquidity layer to support.

Mantle is also a modular Layer-2 Ethereum scaling solution and the first to leverage EigenDA for data availability Why Mantle? Because the chain is built on top of the Ethereum blockchain, as a Layer-2 scaling solution that alleviate the mainnet issues from processing every individual transaction. By harnessing Optimistic Rollup technology, Mantle can securely log transactions occurring on the Layer 2 through off-chain computation, before settling the rollup of transactions on-chain. We all love modular solutions!

Stratum takes inspiration from Solidly, Velodrome and many other similar protocols that have launched since and iterated on the original Solidly model. It is our strong belief that every chain should have a base layer like Stratum, to be used as a public good and deliver liquidity as a service to projects on the network, offsetting harmful ‘costs of doing business’ such as emitting native tokens in order to incentive liquidity.   

Stratum has adopted some of the changes implemented by newer Solidly forks in an effort to make the DEX as fair to all users and protocols that wish to use it. These changes include:

  • Introduction of 3pool for deep stablecoin liquidity and a focus on stablecoin growth on Mantle
  • A sustainable emissions schedule (see emissions)
  • #Meta Bribes as a way to incentivize better bribes for veSTRAT holders
  • Paritally locked liquidity rewards to turn every user into a governance stakeholder
  • Removal of negative voting to avoid malicious farmers acquiring access to governance.
  • Whitelisted token requirement to avoid selfish LPs and promote blue chip token participation.
  • Trading fees for volatile pairs = 0.3% and trading on stable pairs = 0.04%, and a fee structure designed in a way to bring the most value to $veSTRAT holders.

Let's go with the background story, and how I discovered Stratum. I discovered the project before it's launch, let's say in the pre-beta stage, and explored the idea. It looked interesting so landed on their Discord, then got active and got an OG tag in the channel! Months after... Stratum launched and the initial distribution included the Strata role holder.

Stratum uses two tokens to manage its utility and governance: $STRAT (ERC-20 utility token) and $veSTRAT (ERC-721 governance token in the form of an NFT). You can lock your STRAT to earn rewards and governance rights. Each locked position is created and represented as an NFT, meaning you can hold multiple locked positions.

The reward came as a veNFT, claimable upon launch. I feel good about receiving mint #100, which came with 2,184.00 locked $STRAT! Managed to get some $MNT for the fees and claimed my NFT. The next step was to use it for gauge voting! 

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The veSTRAT holders decide which liquidity pools receive emissions in a given epoch by voting on their preferred liquidity pool gauges. The $STRAT emissions are distributed proportionally to the total number of votes a liquidity pool receives, while voters receive 100% of the trading fees and bribes collected through the liquidity pool they voted for.

I had some issues joining the first epoch, quickly sorted by adding more $MNT in my wallet. Even if I had enough to cover the fees, Metamask was glitching and required 2 $MNT in there to complete the transactions without errors. 

I joined the second epoch, using 100% of my votes on the USDC - STRAT gauge. My votes had an estimated reward calculated at $1.01 per thousand votes. Shall I just vote for few epochs and then claim the rewards or claim weekly and build an LP? What's the best approach?

I will probably dive into mETH-ETH as well as this pool also earns Eigen Points for users, based on their mETH holdings. On top of that... I will get nearly 60% APR in $STRAT emissions. 

Looking at the numbers below, and what 1000 veSTRAT can earn, shows that several pools have a vote APR above 100%. The LEND pool with 226% brings a 4.34% weekly APR per 1000 veSTRAT. It's so good to be early! 

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I mentioned "epochs" few times, but why are important? Voting epochs last a week, ending on Wednesday, and are influencing the token emissions. The initial supply of $STRAT was 25,000,000 tokens and the weekly emissions started at 500,000 $STRAT, 2% of the initial supply.

The amount decays at 1% per week (epoch) for the first 20 weeks, and then will decrease to 0.5% per week. The system was made to create price stability while continuing to reward LPs. The 2% of the weekly emissions will be directed to the team wallet each epoch to fund ongoing development, pay for hosting fees and build the next integration of Stratum Exchange. Another 7% of emissions will be allocated to rewarding protocols who bribe as part of Stratums Meta Bribe initiative.

This will remain as 7% of weekly emissions in perpetuity unless otherwise voted on by the Stratum DAO.    Here's the beauty.... the remaining emissions will be directed to the pools as voted by $veSTRAT holders! LP's will earn a portion of liquid $STRAT (70%)  and a portion of locked tokens as veSTRAT (30%)! The $veSTRAT supply does not affect weekly LP emissions rates or rewards.

Want to know what cool features are currently being built behind the scenes? Here's something that your are reading here first.... a wrapper for LPs will soon be created, auto-compounding and managing their veSTRAT emissions for them! Let's go!   

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Mind Puzzle
Mind Puzzle

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