Is the ETA option based on the Mempool ?
Yes. The ETA option gives an
estimated number of blocks to have your transacted confirmed in - between 25 blocks and the next block. To estimate this, Electrum looks at the current size of the mempool, and places your transaction anywhere from 0.1MB from the tip for the next block, to around 10-12MB from the tip for 25 blocks.
This is, of course, only an estimate, as it is impossible to predict the future. It assumes that blocks are found at a 10 minute intervals, and while this is the average, it is not uncommon to have block times of up to an hour. Further, at any time someone (likely an exchange) could drop several megabytes of transactions in the mempool which could push your transaction down.