Mantle’s Token Migration Paused – FTX’s BIT Token Conversion Plans Changed

The planned conversion of BitDAO (BIT) tokens valued at $43 million to Mantle (MNT) by Alamada Research, as well as the operations of the now defunct FTX exchange, have encountered a roadblock.

This development comes in light of an initiated dialogue by a community member within the Mantle decentralized autonomous organization (DAO). The proposal seeks to stop the collapsed entity from the token swap process amidst the ongoing token migration.

Automatic Migratability of FTX Groups Token To be Restricted

FTX exchange and Alameda Research currently possess approximately $43 million worth of BIT tokens, a result of BitDAO’s exchange of 100 million BIT for over 3.3 million FTX tokens in 2021. However, the landscape has undergone significant transformation since then, with the collapse of the FTX exchange. This turn of events prompted a BitDAO community member, who goes by the username “cateatpeanut,” to initiate a dialogue within the Mantle decentralized autonomous organization (DAO).

Cateatpeanut’s perspective contends that the BIT tokens held by the FTX group should not be included in the migration process proposed for the newly introduced MNT token. The reasoning behind this stance revolves around several factors that disqualify these tokens from participation. A few months earlier, a proposal aiming to establish a “One Brand, One Token” principle gained traction and was subjected to a vote on BitDAO’s Snapshot platform.

This proposal, put forth by the same user, cateatpeanut, suggested a transition from the BitDAO BIT token to a fresh governance token. This initiative, designated as proposal BIP-21, entails the consolidation of the BitDAO ecosystem, encompassing governance (BitDAO) and product (Mantle), under the banner of Mantle.

While governance processes and treasury management would remain unaffected, BIT holders would undergo a token conversion process to adopt the new Mantle token following community ratification. On May 19, the proposal to merge Mantle and BitDAO garnered overwhelming support from the community.

The Bybit-supported L2 network Mantle community proposed that the BIT token owned by FTX/Alameda should not be converted to new MNT token.

Alameda once got 100 million BITs using 362,315 FTT in 2021. Alameda currently holds 98.86 million BIT worth $42 million.…

— Wu Blockchain (@WuBlockchain) August 18, 2023

Nevertheless, a recent discourse among community members has unveiled a critical aspect: the tokens owned by the now-defunct crypto entity do not possess an assured entitlement to migration in the context of these discussions. Currently, the on-chain migration contract has been paused until the conclusion of the discussion and the vote.

What Does the BIP-21 Proposal Entail?

Following a reported vote count of 235 million BIT in favour and 988 BIT against, the BIT token’s transformation into the MNT token was endorsed. This MNT token presently stands as the indigenous currency within the Mantle ecosystem. The planned conversion is anticipated to take place prior to the rollout of the Mantle L2 mainnet, a strategic move aimed at sparing token holders from incurring gas fees linked to the conversion process.

It’s worth noting that the proposed modifications are projected to leave governance arrangements unaffected. According to the stipulations outlined in the BIP-21 snapshot, these alterations are strictly categorized as a “cosmetic rebranding.” The underlying intent of these adjustments is to streamline branding, mitigate potential confusion, and optimize the overall BitDAO ecosystem, all in preparation for the impending mainnet launch.

FTX and its BIT Holdings

In November 2021, Alameda forged a deal with BitDAO, the precursor to Mantle. Both entities got into a deal which executed a swap involving 100 million BIT tokens for slightly over 3.3 million FTX tokens (FTT). This transaction held a valuation of $100 million at the time and was accompanied by a binding 3-year lock-up commitment. This meant that neither party could offload the other’s tokens until November 2024, which is more than a year away.

With a massive chunk of BIT tokens being held by FTX, the now-defunct company will be able to acquire a considerable share of MNT’s supply upon migration. The contention arises from the belief that FTX should not be able to enjoy these benefits after falling short of upholding its earlier lock-up arrangement. The exchange had already been suspected of dumping its BIT tokens during its crash a couple months ago.

On the opposing side of the discourse, there is a perspective asserting that imposing programmatic restrictions on FTX’s participation could potentially cast the network in the light of centralization and subjectivity. The resolution of this matter emerges as a pivotal assessment of early governance for the fledgling Mantle DAO, carrying weighty implications for its trajectory.

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