What is Mango?
If you've experimented with Solana then it's impossible to have missed Mango Markets. The protocol emerged during "Solana's summer" in 2021, when many users were looking to migrate towards a blockchain with low transaction fees. Solana quickly emerged as the best home for these users as it offered a trading experience that was similar to traditional finance, but with the added benefit of trading crypto tokens and derivatives.
The platform allows users to trade a wide range of assets, including cryptos and derivatives, with high leverage and low margin requirements. Mango markets also provides liquidity incentives for liquidity providers, making it an attractive platform for traders and investors alike.
Mango is completely open-source, meaning the code is publicly viewable by anyone. This is one of the strengths of DeFi, as contributors can improve the protocol and feel like they are part of something bigger than a casual Web2 platform. Additionally, it allows for accountability as token holders have a direct incentive to improve the protocol to stay competitive.
Unfortunately, Mango experienced an exploit in 2022 that brought the protocol to its knees. In order to explain the Mango hack, it's important to mention a major risk that exists in DeFi. Namely, low liquidity pools. In the world of DeFi, liquidity is king. Without liquidity, DeFi protocols can become like a deserted island with no means of escape. Prices become volatile, transactions become slow, and traders become stranded, desperately trying to get out before they get rekt.
https://twitter.com/mangomarkets/status/1579979342423396352
Low liquidity can also attract predatory traders, who swoop in like vultures to take advantage of the situation. They'll manipulate prices, create fake orders, and generally wreak havoc on the protocol. This is exactly what the Mango hacker did. He began by taking a MANGO-PERP position using over $5M in tokens deposited into the protocol.
The attacker then created another account and purchased the offered units for $0.0382 apiece, which raised the spot price. Shortly after, the price peaked at $0.91 per unit. This increase resulted in the second account achieving a profit of approximately $423M. This profit was then used to take out a loan of $116M, draining the liquidity from the protocol. The resulting drop in spot price (to about $0.02) also put the first account in profit, which would have allowed a further drain if any additional value was available.
To add some spice, the hacker (going under the name Eisenberg on Twitter) bragged about the hack and went as far as to say it was fair game to play the protocol – after all, he used the mechanics of Mango to pull off the heist. While Mango doesn't require KYC, the fact that Eisenberg bragged about it on Twitter led to his demise.
Overall, the attacker manipulated the oracle data of the MNGO token to take out massive under-collateralized crypto loans from the Mango treasury. Users have lost a total of $110M from this scheme. Eisenberg was eventually arrested by the US Justice Department, but the damage was already done. Since the hack, Mango Markets shut down its protocol as the TVL dropped from $100M to ZERO in one day. Users hope that the attacker will be coerced by the authorities to return the funds so Mango can restart its activity.
How does Mango work?
Mango Markets is built on the Solana blockchain and utilizes Serum DEX for spot margin trading while perpetual futures are traded on Mango Markets' own order book. This makes Mango a hybrid between a DeFi platform and a traditional trading app.
Working with derivatives requires a lot of health checks for the collateral. Traders need to have assurances that their position doesn't get liquidated by accident, and lenders need to know their deposit is paid with interest. All these instructions are encoded into smart contracts that users interact with directly.
The Mango team understands that there is always some degree of risk with DeFi protocols. The liquidation engine may fail during periods of high high volatility, or a bug can mess up trades. To safeguard users from potential mishaps, Mango Markets programme has allocated $23M for an insurance fund.
Mango Markets is fully controlled by the MNGO token holders. With a sizable Treasury, MNGO holders have a say in where the funds are allocated, which parameters to adjust, and they even decide which smart contract upgrade goes through.
How to make money on Mango?
On Mango, users can make money by lending and borrowing. After the 2023 hack, liquidity on Mango went to zero until the protocol is ready to restart.
Mango Lending
Lending on Mango can be a great method to put your idle crypto assets at work. This is a relatively low-risk strategy that requires no advanced knowledge.
Here's how you lend on Mango:
Open the Mango app
Select the asset you would like to lend in the Borrowing tab
Click on the "Deposit" button and input the amount you would like to lend
Approve the transaction
Deposit
Upon lending, you will be credited with tokens representing your position in the lending pool. These tokens automatically accrue interest.
Once you have deposited, your crypto assets will start producing interest immediately. Funds can be withdrawn at any time along with the accrued interest. The longer you lend, the higher the accrued interest.
Mango Borrowing
Borrowing is a useful strategy to increase your buying power while maintaining exposure to the underlying collateral. Unlike lending, borrowing is a more advanced strategy because there's always the risk of having the collateral liquidated.
Mango uses a visual representation of your borrowing position in the form of a Health Factor. As long as the Health Factor stays above 1 the borrowing position is safe. If the Health Factor drops below 1 users can deposit more collateral or risk having a portion of the collateral liquidated.
With these caveats in mind, here's how you borrow on Mango:
Open the Mango app
Select the asset you would like to borrow in the Borrow bracket
Choose your asset and input the amount you would like to borrow
Approve the transaction
Deposit
Price Prediction for Mango — Can it hit $1000?
Buying and hodling MNGO — the native token of Mango — is one way of potentially making money on Mango.
By looking at its current price, it’s natural to think about the chance of MNGO hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the MNGO token by analyzing its tokenomics. MNGO’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} MNGO tokens being in circulation today, that means a price of {PRICE} per MNGO.
How did we come to that calculation? It’s quite easy, the price of a MNGO token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each MNGO coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of MNGO at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for MNGO to hit that price.
At a price of $1000 per token, that means the current market cap of MNGO would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. MNGO’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} MNGO which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of MNGO? Taking into account the current price of a MNGO token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. MNGO coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a MNGO token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the MNGO protocol fully diluted market cap.
These are all crucial details to know when calculating if MNGO can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of MNGO depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some MNGO to your portfolio, the most trusted places to get some are Binance and Coinbase.
