DeFi x AI: the next power couple

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Yesterday was a bloodbath in the markets.

What happened? Macro struck again. Traders saw job openings data and went full panic mode.
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And on top of that, the U.S. Department of Justice is cleared to sell $6.5billion worth of Bitcoin. These are the BTC seized from Silk road years ago. Lots of people are panic’ing and thinking the bull run’s over.
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Me? I doubt it. Make sure your portfolio can survive the short-term volatility. This is just a dip. When I feel like we’re near the top, I’ll let you guys know.

Here’s what we got today:

• Deep Dive. Comprehensive analysis of the Mantle ecosystem.
• DeFAI narrative. Introduction to the new meta in the Agent sector.
• Around the web. Frax released a “universal interface”, Dev.fun is in early access, Morpho introduced Vaults 1.1, and more.

Today’s email is brought to you by Mantle — a high-performance ETH L2 ecosystem.

Here’s your Edge 🗡️!

Sponsored Deep Dive

Mantle’s Meteoric Rise: Why This Ecosystem Is Set to Dominate in 2025

Key Points:

• In 2024, Mantle hit ATHs, launched some of the best products in the markets (mETH, cmETH, COOK, FBTC, and AUSD), and set the stage for a massive 2025
• Mantle is set to transition to a ZK rollup in 2025, improving platform efficiency by an estimated 165x.
• Mantle is partnering with big names such as EigenLayer, Ethena, and Pendle. This supercharges rewards and ecosystem growth.
• In the past 3 months, $MNT’s price has surged from $0.59 to $1.36 (+230% increase)

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I’ve often wondered what it’d take to “break out” as an ecosystem.

With so many Layer 2 solutions competing for attention, it’s easy to feel overwhelmed. So, what does it take for an ecosystem to truly stand out?

Here’s the checklist:

• Superior tech
• Strong team
• Deep funding
• Solid metrics growth (TVL, Inflows, DAUs, etc.)
• Ways to attract builders/new users

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There’s one chain that checks all the boxes and caught my attention last year.

Enters Mantle. Mantle is a Layer 2 that combines rollups with modular data availability to reduce costs and increase accessibility while maintaining ETH security.

“Oh great, another layer 2…”

Bear with me cause this one is different. Why? Let’s start with their treasury size.

Mantle’s treasury is the largest community-owned treasury. Crypto is governed by incentives, and what’s better to generate incentives than a deep treasury?

Why Mantle Is Different?

• All Yield, All Day. Every Mantle product – MNT, mETH, cmETH, FBTC, COOK, and AUSD – is yield-bearing. (this is rare for a Layer 2)
• They own the largest community-owned treasury. Ensuring long-term growth incentives without running dry.
• Mantle’s modular architecture makes it 100x faster and 90% cheaper compared to Layer 1’s.

​They have a lot in their favor, so let’s break down Mantle’s core pillars. MNT, mETH, cmETH, COOK, and others.

Mantle’s Core Products

MNT

• $MNT powers Mantle’s ecosystem, serving as the cornerstone for governance, staking, gas fees, and more. When we look at $MNT performance in the past couple of months, few chains truly compete with it.

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• In 2024, over $35M were distributed to $MNT lockers through the Rewards Station. (airdrops).
• $MNT success is also a reflection of its rewards system, low $MNT inflation, huge treasury, engaged community, and much more.

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mETH

• Mantle’s success translates to its core products. Mantle’s liquid ETH staking solution, mETH, is already the 5th largest ETH liquid staking token. With over $1.67B in TVL.
• Since mETH facilitates numerous yield processes in Mantle, there’s no reason to hold plain ETH. The ecosystem is designed for the use of mETH.
• mETH is also widely accepted as collateral in CEXs, DeFi, and money markets.

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cmETH

• Following mETH’s success, Mantle launched cmETH, a new liquid restaking token.
• If you think launching new LRTs might saturate Mantle ecosystem. Check what happened with Mantle’s TVL following the launch of mETH:

Nothing more obvious than launching an LRT to bootstrap even more liquidity (it actually paid off, as you’ll see in the Metrics section)

• cmETH is a restaked version of mETH that offers even higher APY. It’s set to become a major asset in the Mantle ecosystem, boosting yields and attracting more capital.

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COOK

• COOK is the governance token for both mETH and cmETH, which puts its FDV way above a single LST governance token.
• Mantle is releasing COOK with airdrop incentives, as shown in Metamorphosis Seasons 1 and 2. Money flowing to Mantle means more liquidity, which in turn means chain growth.

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FBTC, AUSD, and Others

• FBTC integrates Bitcoin into DeFi, unlocking new opportunities for BTC holders. It already bootstrapped over $1.23B in TVL.
• AUSD is another addition to Mantle’s products. It’s a stablecoin fully backed by cash, T-Bills, and repo agreements, making it an institutional-grade stablecoin inside the Mantle ecosystem.

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If you want more details about other and upcoming products for Mantle, check here.

In theory, all Mantle products sound great. So, let’s see how they’re doing numbers-wise.

Metrics

In 2024, TVL growth hit a new ATH of $2.36B. Around 650% growth in 1 year. Vaneck even selected Mantle as the top-performing Alt-DA ETH L2 in their monthly recap for 2024 December.

Here’s a summary of their main on-chain metrics:

I want to highlight 2 things here:

1. $MNT price basically 2x this year
2. They’ve onboarded over 4 Million new users

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Mantle crushed in 2024. Hitting ATHs across all main metrics. They’ve officially passed the research test.

Now it’s time to dig into how you can reap some rewards in Mantle’s ecosystem.

How can you earn with Mantle?

Let’s discuss what you’re actually looking for. The juicy yields.

You may feel lost cause there’s a lot to do inside Mantle. Don’t worry: my team dug deep and found some of the best risk-reward pools you can leverage inside Mantle.

This section will focus on core ways you can get yield with Mantle core products – MNT, cmETH, mETH, and COOK –

Take a look at how much Mantle distributed in 2024:

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Here are the pools we’re watching:

1- Supplying liquidity for cmETH/mETH in Metamorphosis S2​

This is less risky but offers rewards from Eigenlayer, Symbiotic, Karak, Veda labs, and an extra COOK airdrop.

Two birds with one stone.

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2- Over 500% yield on Merchant Moe​

Want the insanity? Here it is.

• COOK/USDT paying 620% APR
• MNT/USDT paying 861% APR

​Important Note: If you are not familiar with concentrated liquidity, do not touch these, or you will become lost in the impermanent loss. This pool is only for people who are advanced in that concept.

3- Mantle Rewards Station​

Pretty simple, allocate your MNT to get rewards from different pools.

You can opt to lock tokens for an extra boost. The APY on this pool is quite good:

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Final Thoughts

There are two things that drive ecosystem growth: Yield and dApps.
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This is actually where Mantle has an unfair advantage that keeps driving their growth.
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First, their massive treasury and strategic partnerships give massive yield opportunities. When researching where to park some of my ETH, I chose the Mantle ecosystem.

Bluechips are also entering the Mantle Network. Aave is discussing deploying v3 on Mantle.

Second, dApps. Mantle has the ability to develop world-class products in-house with protocols such as mETH, cmETH, and Cook. This gives unique composability within one ecosystem.

And they have a lot planned for 2025:

• Transition to ZK proofs with the versatility of OP Stack. An expected 168x improvement over existing bridging capabilities.
• Blend AI + crypto to unlock new applications while leveraging the best narrative so far in this cycle.
• Expanding their grade of products with new additions like FBTC and AUSD.
• Delivering more and more with mETH, cmETH, and COOK.

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Mantle isn’t just another Layer 2. They’re poised to be a game-changer this cycle with innovative tech, strategic partnerships, and great products.

I spent a lot of time navigating Mantle, and I’m 100% sure they’ll go for more. They’re crazy active and keep hitting important milestones, so I’m not fading Mantle anytime soon.

Bridge to Mantle Today →​

Disclaimer: This deep dive is commissioned by Mantle. I personally researched and wrote the article myself, and it reflects my honest opinion. This is meant to be an educational piece to bring awareness to Mantle, which I’m a fan of. – Edgy

Narratives

DeFAI: New Meta in the AI Agent Narrative

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The number of AI Agents is exploding. There are personality agents, trading agents, utility agents—the list goes on. It’s chaotic and overwhelming.

Focusing on a sector within AI can help. There’s one sector bubbling with potential: DeFAI.

I believe this intersection of DeFi and AI is where billions will flow in the coming months. Positioning yourself now could be a game-changer.

What is DeFAI? It combines Decentralized Finance (DeFi) with Artificial Intelligence (AI) to create a new wave of projects. The goal? Make DeFi accessible to the average user through AI Agents.

DeFi was supposed to bring financial tools to everyday people. But it was too complicated for many people. So it didn’t reach its full potential.

AI is here to fix that. The dream is simple: using DeFi should feel as easy as texting your tech-savvy cousin. Just type, “Stake my ETH,” and the AI handles the rest.

(Caveat: This is still hopium. Many projects are early-stage and not fully live yet. Achieving this vision will depend on technical progress.)

Why am I bullish on DFAI? There are several reasons:

• User Profitability: Over 80% of users can make better profits with AI-powered trading and farming. AI reduces costly human errors.
• Revenue Potential: Protocols like Photon and BananaGun already print money by making DeFi easier. DeFAI projects can take this to next level.
• Real Value Proposition: Unlike many AI Agent slops, these agents can provide actual value to DeFi.

​​Daniele Sesta, the controversial founder of Frog Nation, outlined three big use cases for AI in DeFi:

1. AI as a DeFi Interface: No more 100-click processes. Just text, “Provide liquidity to ETH-USDC,” and the AI gives you a single button to execute..
2. Autonomous DeFi Agents: These agents will control wallets and use DeFi on their own. These will be optimized for security and cost-effectiveness.
3. DeFi Research Agents: AI scrapes mountains of content and data. Users can access this through an easy UX. No more tab overload or endless research.

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For a deeper dive, check out this article.

Let’s talk about some top projects in the sector.:

#1. Griffain (MC: ~$385M). It allows you to use Solana DeFi from a chat interface using natural language. It’s like Appstore where you can use different agents to complete different tasks. Some tasks I’ve seen demonstrated include copy trading a wallet, creating a memecoin, and taking profits for you automatically.

It’s built by @tonyplasencia3, an OG builder on Solana. Right now, it’s in invite-only access.

#2. HeyAnon (MC: ~$200M). It’s a Sonic project that will simplify DeFi activities for users. Some recordings have demonstrated its abilities, and a public beta is open at the end of January. It is led by Daniele Sesta. who has a proven record of building.

He was the founder of Frog Nation, which created multi-billion dollar protocols. However, he became controversial due to his partnership with 0xSifu, a convicted criminal. Still, his proven ability to execute is a positive thing.

#3. Mode Network (MC: ~$100M). This is an ETH L2 that was focusing on AI Agents even before GOAT made them cool. There have been 129 AI Agents built on Mode Network. These Agents have made more than 1,600 DeFi transactions for now.

• Arma by Giza. An agent that helps you optimize USDC yields farming across Mode applications.
• Brian. Allow users to use natural language to execute transactions and deploy contracts at their fingertips.
• Sturdy. Leverage AI-powered Yield Bearing Vaults to aggregate and optimize returns.
• MODIUS by Olas. Allow you to co-own or launch your own AI Agent to optimize liquidity farming strategy.
• Amplifi. Get the best return across multiple chains by leveraging omni-chain liquidity and AI optimizations.

​If you want to see my full DeFAI token watchlist, check out my full article on X.

🚀 DeFi Catalysts

Morpho Labs introduced Morpho Vaults 1.1. This version is more suited for the growing number of B2B integrations with Morpho.

Frax Finance released “Frax Universal Interface“. It should make it easier to use frax and attract more users.

Resolv Labs has launched the Resolv Markets on Morpho Labs, enabling leveraged strategies. The vaults are curated by Gauntlet and MEV Capital.

Veda Labs and EtherFi introduced Liquid BTC. It offers Bitcoin yields from DeFi with 1-click access. The strategy curation is done by MEV Capital.

Dev.fun was introduced. It claims to allow people to create an app and connect it to a Pump.fun coin by describing it. It is in early access right now.

Illuvium is partnering with Virtuals. They’ll use Virtual’s GAME framework to create Autonomous NPCs in their game.

Vertex Protocol launched on Sonic. Users can borrow, lend, and trade 60+ spot & perpetual markets on Sonic with unified onchain liquidity and low fees.

Spectra launched the first lending market for its Principal Tokens on Morpho. It uses PT-wstUSR from Resolv as collateral and is managed by MEV Capital.

Solv Protocol was involved in a controversy regarding the backing of SolvBTC. Solv team has addressed many of the concerns.

🐦‍⬛ X Hits

1. A thread of good BTC farms.
2. Updates from the Virtuals ecosystem.
3. A comprehensive guide for making it in crypto.
4. ​Solana DeFi ecosystem outside of memecoins.
5. 5 great articles on the AI x Crypto intersection.

😂 Meme