MNT - early days of BNB ?

TLDR

• ◆With BNB at a new ATH along with DAT treasury companies rising and OKX burning 90% of their total supply, MNT is in a very interesting position at the right time with some new updates and potential catalysts expected by smart market participants.
• ◆Bybit has climbed up the ladder to be one of the biggest exchanges internationally and their recent AMA shows they are serious about creating more demand for the MNT token.
• ◆We expected MNT to outperform if the market sustains strong momentum and outperforms in terms of relative performance compared to other CEX platform tokens, as their catalysts of potential buyback/burn from exchange fees (and perhaps some from treasury) are only coming now, while all other CEX tokens have burned their bullish catalysts.

Status of CEX Tokens

BNB

• ◆BNB is well known for their quarterly burning routine. Binance used to claim they used trading fees to burn random amount of BNB historically. However, for transparency, they have adopted a Quarterly Auto-Burn formula that basically gets modified based on the price of BNB. They target to continue burning until they reach 100,000,000 BNB.https://www.bnbburn.info/

https://www.theblock.co/data/crypto-markets/exchange-tokens

• ◆This is predictable and easy to calculate - therefore, the potential upside from purely trading based upon these metrics is obviously low EV. However, BNB (as the biggest CEX token in the world) is also one of the first to receive attention as a DAT token. Therefore, potential demand for BNB is still on the table.https://www.theblock.co/post/368075/b-strategy-1-billion-bnb-treasury?utm_source=twitter&utm_medium=social
• ◆Lastly, BNB was first introduced as a token that you can hold to receive a discount on fees while you trade on Binance. They later introduced Launchpads and different products, bringing more benefits for BNB holders. By presenting high-quality products, BNB became a very attractive investment back in the old bull-run.
• ◆BNB is also the gas token of BSC and BNB Greenfield.

Essentially, BNB was the pioneer in setting the path for creating demand for a CEX token. Many other exchanges have copied or modified the textbook model of BNB.

OKB

• ◆OKB received spotlight as they burned 90% of their supply in one go. They have been using a portion of their exchange fees to constantly accumulate OKB on their buyback / burn wallet.
• ◆OKB also has most of the functions that BNB provides for Binance such as VIP tiers, fee discounts, L2 gas token, buyback / burn, etc… However, because their burn was in one go (although their buybacks were quarterly) it seemed to have caught eyes of many.
  

(above is price, and below is the Mcap chart)

MNT

• ◆MNT is very interesting because it didn’t start off as a CEX token and is now in the stage of integrating MNT as the official Bybit CEX token, adding utilities and potential revenue flows.
• ◆MNT goes a long way - it initially started off as BITDAO (an investment DAO token that launched in August 2021). BITDAO never really took off, and later in 2023, the team pivoted to Mantle as an L2 with liquid staking functionalities. MNT is essentially an L2 gas and governance token similar to OP or ARB. Although everyone knew BITDAO / MNT was backed and initiated by the Bybit exchange, there was no real synergy or interaction.
• ◆Recently, there was a big update with two Bybit leads joining the Mantle Advisory Board. This hinted a shift where MNT may really start getting integrated within the Bybit ecosystem.https://group.mantle.xyz/blog/announcements/mantle-welcomes-bybit-luminaries-to-advisory-board
  
• ◆Since early August, Bybit has already started adding utilities and use cases for MNT.https://x.com/Mantle_Official/status/1958891973898903679

Expectations on MNT going forward

• ◆The most exciting part is that MNT has only just started getting utility and real demand through Bybit. Before, it used to be an L2 gas / governance token - but now Bybit is creating markets and different campaigns bringing more benefits for MNT holders.
• ◆MNT is essentially transforming into BNB of Bybit (a real CEX token) along with all the different features BNB holders enjoyed, such as Bybit Launchpool, fee discounts, VIP status, etc.
• ◆There are mainly two significant catalysts that we can speculate on moving forward.

1. ◆MNT Sinkhole through Bybit Products
   • ◆Although not yet fully confirmed, there are several areas where Bybit can introduce initiatives to create demand for MNT.
   
   • ◆Back in the old days, Binance Launchpools were so profitable that basically everyone was trying to scoop up BNB on every dip. Bybit introducing strong projects on their launchpool and requiring MNT can create demand.
   • ◆Bybit is the second-largest derivative volume-generating CEX in the world. Introducing VIP tiers based on MNT holding for cheaper fees and people paying fees with MNT creates a massive sinkhole for MNT.
   • ◆Bybit reported to have ~70 M registered users.
2. ◆BURN
   • ◆There are two potential areas where we can expect some sort of burning activity.
   1. ◆First is Bybit's revenue flow - Bybit does an average of $25 billion volume on Perps daily and ~$5 billion on spot. If Bybit (like Binance and OKX) decides to rotate a portion of fees into buying back and burning MNT (which had positive feedback during the AMA) this could trigger a consistent sinkhole for MNT token.
   2. ◆Treasury Holding Burn - Currently, the Mantle Treasury holds approximately $3 billion worth of MNT (~45% of Total Supply). This amount has been transferred from the initial treasury holdings of BITDAO from the BITDAO treasury.https://group.mantle.xyz/treasury
      • ◆The Mantle team has a track record of not being too conservative on the burning side, as they burnt ~3 B BITDAO tokens (~$1.5 B with $0.5 / BITDAO in June 2023) during the conversion phase from BITDAO → MNT.https://snapshot.box/#/s:bitdao.eth/proposal/0x8446404bd2dbd6a0b6b3a70dd2db64bd5b4a5408684aa93b263623fa0fdc0e85
      • ◆Most ecosystem grants have failed historically and have only dilutedd the token. Therefore , there is a decent chance some systematic burning from the treasury is in their undisclosed roadmap.
      • ◆This requires token holder voting. However, from the holders' perspective, would you vote no so that it just stays in the treasury holding for future incentive dilution or vote for a systematic and sustainable burning model? Probably a lot of holders prefer burning over dilution.
      • ◆Although this is not expected by many, there is a decent chance this may happen and probably will be the biggest catalyst there is for MNT (as it cuts the FDV of MNT in half).

Conclusion - Bullish for MNT

This is a comparison between MNT and OKB. Fundamentally, MNT has traded at an annual MC ratio of 0.95 to OKB. Given that these two were trading at a similar ratio historically, when OKB had all the buy-pressure, it can be assumed that MNT will eventually trade at a higher MNT/OKB ratio, with the catalysts mentioned only starting to flow in this month.

Bybit has similar volume in perps, while its spot volume ratio is ~10x of OKX’s. Fundamentally, with more demand flowing into MNT both from volume fees and real demand for utility, MNT should be trading at a premium relative to OKB performance.

Although OKB’s FDV is not drastically different due to the burn, the pre-burn FDV of OKB would be around $51 B (170 × 300M). The pre-burn FDV of OKB shouldn’t be the target of MNT, as its price action has been extremely volatile post-burning news.

Currently, with the 45% locked in Mantle Treasury, MNT’s real MC stands at ~$3.8 B. This is extremely close to the post-burn mc of OKB. However, considering catalysts flowing in now along with the potential chance of burning of the treasury, there is a decent chance MNT trades at a high premium relative to OKB.

The level of bullishness and target for MNT will highly depend on the metrics and level of demand we see from future updates from the Bybit X Mantle team. But if we were to set a level of bullishness depending on news, it would be: