Introduction

Mode Network is a modular Layer2 focused on the DeFi track, based on the OP Stack, and has adopted the Optimism Bedrock upgrade, allowing it to reduce costs by more than 95% compared to the Ethereum mainnet. In January 2024, the project received a $5.3 million donation from the Optimism Foundation (issued in OP tokens), and Mode will also donate a portion of its sequencer revenue to the Optimism Collective. Mode maintains a good relationship with the Optimism Foundation, which is beneficial for the project’s development.

Current Development

Steady Growth, Leading in TVL

Mode launched its mainnet on January 31, 2024, and started an airdrop in February.

2023.12 Team Building

2024.01 Received a $2 million donation in OP tokens from the Optimism Foundation

2024.01 Mainnet Launch

2024.02 Start of token airdrop

2024.02 Launch of Mode Flare

2024.03 Partnership with Layerzero, Redstone

2024.03 Partnership with Ether.fi, Renzo

Since the launch of the autonomous network, its Total Value Locked (TVL) has been steadily increasing. As of March 19, 2024, it ranks 13th among all Layer 2 networks, with a TVL of $162 million. The average transactions per second (tps) are 1.62, and the median GAS fee is 0.001 Gwei, which converts to a cost of less than $0.01 USD. Over the past thirty days, there have been 2.12 million transactions.

During the airdrop event, here’s a guide to interaction:

The total supply of Mode tokens is 10 billion, of which 5.5% are allocated for the airdrop. The specific tokenomics have not yet been released.

Mode launched a points-based airdrop in February, with the token distribution expected in April. Users can earn airdrop tokens by accumulating points. Participation now allows for earnings in less than a month.

Currently, there are three ways to earn points:

• Old User Rewards: Web3 old users will receive a certain number of initial points based on their existing blockchain interaction records when they connect their wallets. These points can be activated by cross-chaining some assets (without a specific amount requirement).
• Referral Rewards: After activating their points, users can obtain their own exclusive referral code. Referrers will receive 16% of the points of the users they invite.
• Ecosystem Interaction Rewards: Users can also earn points by interacting with Mode ecosystem applications. Different types of projects will receive different points rewards.

For developers, Mode offers:

• Sequencer income rewards
• Developer airdrop rewards
• Optimism RPG fundraising rewards
• The developer portion of the airdrop includes 500 million tokens, accounting for 5% of the total token supply. The developer airdrop is not related to most users, so it will not be elaborated on.

Here’s a specific interaction process for ordinary users:

1.Visit the airdrop event page (https://ref.mode.network/MDCKN9) to check your initial points. If you cannot see your points and the message “INELIGIBLE TO CLAIM” appears, it means your IP is restricted, and you need to change it.

1. Bridging Assets: Users need to bridge assets from other networks to activate points, and ETH is required for gas fees during airdrop activities. Assets can be bridged using the official bridge or third-party bridges. Using the official bridge, which only allows for asset bridging from the mainnet, incurs higher gas fees, and there is a seven-day waiting period for asset withdrawal. Alternatively, users can choose third-party cross-chain bridges like MiniBridge (https://minibridge.chaineye.tools/) to bridge assets from other layer 2 networks to Mode, which results in lower bridging fees. Community administrators state that using the official bridge at least once is necessary. It’s recommended to first use the official bridge, then utilize third-party bridges.

3.Interactive Applications: Users can interact with applications on Mode to earn points, with different applications offering varying amounts of points. Additionally, Mode has collaborated with the lrt projects ether.fi and renzo, which both have high Total Value Locked (TVL) and substantial funds, beneficial for boosting Layer 2’s TVL. Sharing a “double-dipping” strategy, users can bridge weETH tokens and ezETH to Mode, allowing them to simultaneously earn staking rewards, Eigenlayer points, lrt protocol points, and Mode points, thus improving capital utilization.

Project Analysis from Various Dimensions

Team background

James Ross

Founder of Mode Network

Graduated from the University of Sussex in the UK, majoring in Economics and Philosophy.

Invested in EigenLayer and Ethena.

Served as an advisor at Hashflow.

Federico Sarquis

Technical Lead of Mode Network

Previously organized events for Ethereum Argentina.

Regarding the team, Mode’s LinkedIn page lists a total of 15 employees. However, the core team is not very large. Judging from the employees’ bases, it’s likely they have adopted a remote working approach. Founder James Ross’s investments in EigenLayer and Ethena suggest he has good industry connections.

Technical Aspect

Mode is a modular Layer 2 network based on the OP Stack, which has already launched the Layer 3 network Mode Flare, supported by Optimism and Celestia, suitable for developing on-chain games and trading platforms. In terms of technology, besides the concept of “modularity,” it’s important to understand OP Stack and Mode Flare.

1. Modular blockchain

A modular blockchain focuses on handling a few tasks and outsourcing the rest to one or more independent layers.

The purpose of modularity is to solve the blockchain trilemma: security, decentralization, and scalability. This theory, proposed by Ethereum’s founder Vitalik, is considered one of the benchmarks for evaluating public blockchain projects.

Notably, the most famous projects in the public blockchain space—Bitcoin, Ethereum, Solana—emphasize different aspects of the blockchain trilemma. Bitcoin has the strongest security and decentralization in the industry but almost zero scalability. Solana, on the other hand, compromises on security and decentralization to achieve the best scalability among the three.

Modularity involves delegating the consensus layer, execution layer, and data availability layer to different chains. For example, settlements occur on Ethereum, data availability is handled by Celestia, and execution is carried out on Solana using SVM. This layered separation allows for fulfilling different requirements on different blockchains, thereby minimizing the impact of the “blockchain trilemma.”

Modular Layer 2 projects like Mantle, Eclipse, and Boba Network, although not leading in the Layer 2 space, have carved new development opportunities through modularity.

Modularity is a key narrative of this bull market.

2. Op Stacks

Op Stacks, launched by the leading Layer2 project Optimism, is a Stack service that has already been adopted by numerous renowned projects, such as Coinbase’s Layer2 called Base, the asset management application Debank’s Debank Chain, and the leading social protocol Farcaster’s Farcaster Stack. Op Stack is utilized across various sector projects, aligning well with the initial concept of an Op Superchain when Op Stack was first introduced.

The Op Superchain refers to a network composed of decentralized Layer2 solutions, where all Layer2s share security, communication layers, and open-source technology stacks. These chains must adhere to specific standards to enhance interoperability among themselves. Layer2 projects using the Op Stack service should typically be considered members of the Op Superchain.

According to data from L2beat as of March 10, 2024, the top five projects by Layer2 Total Value Locked (TVL) are Arbitrum, OP Mainnet, Blast, Manta Pacific, and Starknet. Meanwhile, Optimism ranks twenty-ninth in cryptocurrency market capitalization, with Arbitrum at forty-seventh. The TVL rankings do not correspond with token market value rankings, a key reason being the adoption of Optimism’s Stack service by many projects, whereas Arbitrum has not. This narrative value brought by Stack services suggests that joining the Op Superchain could currently be advantageous for project development.

3. Mode Flare: An Overview

Mode Flare is a Layer 3 network supported by Optimism and Celestia, specifically designed for developers to deploy application chains. It boasts several key features such as high throughput, rapid deployment, EVM compatibility, and a flexible technology stack. Notably, the transaction fees on Mode Flare are lower than $0.005, making it an economically attractive platform for developers.

Currently, three projects are preparing to launch on Mode Flare:

1. DEDPRZ: A cryptocurrency casino built with $USA tokens and DEDPRZ NFTs.

2. Liq Market: A decentralized derivatives exchange.

3. Macaw: A prediction market for betting on political events or current news.

Mode Flare represents a significant advancement in the realm of blockchain technology, aiming to address some of the limitations encountered with Layer 2 projects by offering cheaper gas fees and higher throughput. This focus primarily benefits applications with high interaction characteristics, such as gaming. While its application value might seem somewhat inferior to that of Layer 2 solutions, its development potential and capacity for innovation set a promising trajectory for the future of blockchain applications.

The Mode Ecosystem

Let’s take a moment to overview some of the ecosystem projects currently launched on Mode.

Ether.fi is a liquidity re-staking protocol within the Eigenlayer ecosystem, based on the Ethereum mainnet. It allows users to re-stake ETH or other liquidity re-staking tokens to generate lrt tokens, obtaining eETH at a 1:1 ratio. As a leading protocol in the liquidity re-staking space, Ether.fi boasts a Total Value Locked (TVL) of $2.67 billion and has raised $32.3 million across two funding rounds, with investors including CoinFund, North Island Ventures, OKX Ventures, and others.

Renzo, another liquidity re-staking protocol within the Eigenlayer ecosystem on the Ethereum mainnet, enables users to re-stake eth or other liquidity re-staking tokens to produce lrt tokens, thereby acquiring ezETH at a 1:1 ratio. Ranking third in the liquidity re-staking space, behind Ether.fi and Puffer Finance, Renzo’s TVL stands at $990 million. Its seed funding round raised $3.2 million, with backing from notable institutions like Binance Labs, OKX Ventures, IOSG Ventures, Robot Ventures, and more.

Kim Exchange is a native decentralized exchange of Mode, community-driven, offering customizable protocols. Through Mode’s sorting fee sharing mechanism, it provides users with greater incentives, with a TVL of $6.45 million.

IONIC is a lending protocol on Mode, supported by MetaCartel Ventures, Ohm, and Mode itself. Aimed at offering the best interest rates on Mode, Ionic is designed with a targeted economic model beneficial for balancing the interests of borrowers and lenders alike, boasting a TVL of $61 million. Its founder is Henri Mahal, with MetaCartel Ventures as an investor.

Mode Name Service, provided by Space ID, offers domain services with the .MODE format. As of March 10, 2024, it has registered 75.7k domains held by 70.3k owners.

LogX is a perpetual contract exchange for Bitcoin and Ethereum transactions, designed as a large aggregator to pool liquidity from different chains. It simplifies user operations by eliminating the need to manage Gas fee tokens or perform multiple transactions for each action, with a TVL of $11.21 million.

Poolshark is a decentralized protocol for targeted liquidity, launched on Mode, Arbitrum, and Scroll, three Layer 2 platforms. It enables liquidity pool depositors to create sell-only liquidity positions, offering professional traders limit order trading on dex, with a TVL of $595,000.

Layerbank, a cross-chain lending protocol engaged in LSD, RWA, LRT, and more, has launched on multiple Layer 2 platforms including Manta, Bsquared, Mode, Linea, and Scroll. Its TVL is $414 million, with $10.11 million on Mode.

Overall, the Mode ecosystem primarily focuses on DeFi projects, offering significant interactive value. Mode is currently dedicated to collaborating with liquidity re-staking projects, benefiting both parties—Mode gains more users and funds, while the tokens of liquidity re-staking projects gain additional use cases.

4.Modular Layer2 Competitive Landscape

Mode is a modular Layer2 that utilizes Op Stack services, so it selects other services using Stack or modular Layer2 for comparison.

5.Conclusion

Mode is a modular Layer2 project that uses Op Stack and focuses on the DeFi track. The Op Superchain created by Op Stack has already hosted many well-known projects, which is conducive to attracting users to expand the ecosystem. At the same time, modularity is one of the key narratives of this bull market. The improvement of public chain performance cannot rely solely on the same public chain. Through modularity, it is beneficial to leverage the advantages of various public chains, hence modular leader projects have already shown impressive performance.

Overall, Mode aligns well with the current development path of Layer2, and its project outcomes are promising. From a competitive landscape perspective, Mode performs quite well among similar projects, aspiring to become the DeFi Hub of the Op Superchain. Its future development is worth paying attention to.

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