Mantle proposes FTX, Alameda BIT tokens should not auto-convert to MNT

Quick Take

  • Mantle’s community suggests BIT tokens held by FTX shouldn’t automatically convert to its new MNT token.
  • The proposal recommends pausing the current migration contract and implementing a new one to restrict FTX.

Ethereum Layer 2 Mantle Network, governed by its DAO, has put forward a proposal concerning the migration of BitDAO (BIT) tokens to Mantle (MNT) as part of the ongoing merger between the two projects.

Authored by community member Cateatpeanut, the proposal states that the BIT tokens held by the troubled FTX Group shouldn’t be automatically eligible for conversion due to various disqualifying factors, adding there is no guaranteed right of migration from BIT to MNT. The on-chain migration contract has already been paused pending the outcome of this discussion and the subsequent vote, according to the proposal.

Mantle Network announced its merger with BitDAO in May, a decentralized autonomous organization known for having one of the largest treasuries in crypto, currently worth over $3 billion. BitDAO’s governance token BIT is transitioning to Mantle under the ticker MNT as part of the move.

By voting in favor, community members are deciding if they want to change the existing on-chain migration smart contract and introduce a new one designed to restrict the automatic conversion capability of FTX Group’s BIT tokens.

FTX Group company Alameda Research, founded by the disgraced former FTX CEO Sam Bankman-Fried, exchanged 3.4 million of FTX’s FTT tokens for 100 million BIT tokens in a swap agreement with BitDAO in 2021. The tokens were worth around $43 million at today’s valuation.

On November 8, 2022, Alameda was forced to provide proof it still owned the 100 million BIT after allegations that it had sold the tokens in contravention of the three-year lock-up agreement, just days before Alameda and FTX collapsed into bankruptcy.

Community agreement

The proposal has garnered positive support from the Mantle community so far. Forum comments from Mantle DAO members like “Igneus," “TaiwanDAO," and “a950216t," agreed that the challenges faced by FTX shouldn't impact the broader investor community.

“I believe this will be the first 100% agreed proposal in Mantle," a community member “jorantan96" wrote in the forum discussion.

Mantle’s launch

Mantle unveiled its Layer 2 network at EthCC in Paris on July 17, alongside a $200 million ecosystem fund. It crossed $40 million in total value locked (TVL) within a month of launch.

Mantle’s modular architecture, Optimistic Rollup design and availability of data in collaboration with the ether restaking protocol EigenLayer, aims to combine high performance with low costs while retaining Ethereum’s decentralization and security, Mantle said at the time.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.