Introduction

Mode Network is a modular platform built on OP Stack that focuses on the DeFi space. In January 2024, it received a $5.3 million grant from the Optimism Foundation (distributed as OP tokens). Mode also donates a portion of its sequencer revenue to the Optimism Collective. The good relationship between Mode and the Optimism Foundation benefits the project’s development.

Team Background

James Ross - Founder of Mode Network

He graduated from the University of Sussex in the UK, majoring in economics and philosophy. He has invested in Eigenlayer and Ethena and has previously served as an advisor at Hashflow.

Federico Sarquis - Technical Lead of Mode Network

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

What is Mode Network？

Source: mode.network

Mode Network is a DeFi Layer 2 solution built on the OP Stack that aims to revolutionize the decentralized finance space by fostering a vibrant ecosystem of top-tier applications and empowering developers and users.

Through innovative on-chain economic strategies, Mode enhances the scalability of applications, increases user benefits, simplifies the deployment process for EVM-compatible projects, and provides a simplified entry point for entering the DeFi space.

At the core of Mode is the contribution of rewards through sequencer fee sharing and developer airdrops, which not only incentivizes development within Mode but also ensures that participants’ efforts are rewarded. Furthermore, it adopts the Bedrock upgrade from Optimism, significantly reducing transaction fees by over 95% compared to the Ethereum mainnet, making it highly attractive to DApp developers.

Features of Mode

Onchain Cooperative

Mode aims to empower developers and users to create a world-class applications ecosystem and directly reward their contributions. We’ve incorporated mechanisms into the protocol, like sequencer fee sharing and user referral fees, to reward those who facilitate ecosystem growth.

Sequencer Fee Sharing

Source: mode.network

Mode Network’s Sequencer Fee Sharing (SFS) is a unique system where developers can earn a portion of the network sequencer fees by registering their contracts in a fee-sharing contract. All transaction fees for the smart contract will be accumulated in the fee-sharing contract.

The SFS contract issues NFTs as a claim to the fees earned by the designated recipient in the registered smart contract. The NFT is transferable and can be used to claim fees for multiple contracts. Multiple contracts can be assigned to one SFS NFT, but each contract can only be linked to one SFS NFT.

The off-chain component will process each smart contract’s transactions to calculate its share of the fees. The component will deposit the earned fees into the SFS contract for developers to withdraw. Note that withdrawals can be made at the end of each epoch, which occurs once a month on the mainnet and once every 24 hours on the testnet.

This feature is not only a reward for developers’ contributions but also encourages the development and diversification of the Mode ecosystem.

Operation of the Fee-Sharing Contract

• Registration and NFT Issuance: Developers register their smart contracts with the fee-sharing contract and receive an NFT in return, which serves as a claim ticket for the accumulated fees.
• NFT Flexibility: The issued NFT can represent multiple contracts, increasing its usability and value.
• Earning Fees: A portion of the transaction fees of the registered smart contracts will go directly into the fee-sharing contract and continue accumulating over time.
• Predictable Withdrawals: Developers can withdraw their earned fees at the end of each epoch, providing a steady income stream.
• Fair and Transparent Calculation: The off-chain component calculates the fee share for each contract, ensuring accuracy and fairness.

This approach not only provides a direct reward economy for developers but it is also the foundation of Mode’s commitment to creating a supportive and collaborative developer ecosystem.

Developer Airdrop

Mode will run a series of developer airdrops to reward developers for their contributions to the Mode ecosystem. A large portion of Mode’s supply is available for developers.

Optimism’s RPG Funding

All developers who build open-source applications and tools on Mode are eligible to apply for Optimism’s $200 million RPG funding program. The Mode team will assist developers in developing their applications.

Low Fees

Mode implements Optimism’s Bedrock upgrade, which significantly reduces fees by more than 95% compared to Ethereum. This makes it fast and cheap to use, perfect for end-user DApps!

Superchain Integration

Mode is powered by OP Stack in partnership with Optimism to contribute to the development of Optimism’s Superchain ecosystem as a major DeFi hub.

Mode Flare L3

Source: mode.network

Mode Flare L3s provide a Layer 3 solution that allows developers to deploy application-specific chains with low fees and efficient infrastructure through Optimism and Celestia. This platform supports scalable blockchain applications with transaction fees lower than $0.005, fast deployment capabilities, and EVM compatibility, laying a solid foundation for the growth and innovation of the DeFi space.

With Mode Flare L3s, developers can enjoy significant advantages such as reduced costs, simplified scalability, and comprehensive go-to-market support. This initiative highlights Mode’s commitment to fostering a vibrant ecosystem and encouraging the development of innovative blockchain projects by providing infrastructure grants and sequencer fee sharing.

Ecosystem Introduction

The following are some of the ecosystem projects that Mode has launched.

Ether.fi

Ether.fi is a leading liquidity re-staking protocol in 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, and obtain eETH at a 1:1 ratio. Its TVL has reached $2.67 billion, and it has raised $32.3 million in two rounds of financing.

Source: DeFiLlama

Renzo

Renzo is a liquidity re-staking protocol in the Eigenlayer ecosystem based on the Ethereum mainnet. Users can re-stake ETH or other liquidity re-staking tokens to generate lrt tokens, and obtain ezETH at a 1:1 ratio.

Source: DeFiLlama

Ionic Protocol

Ionic is a lending protocol on Mode, supported by Metacartel Ventures, Ohm and Mode. Ionic aims to provide the best interest rates on Mode, and has designed a targeted economic model that balances the interests of borrowers and lenders. Its TVL is $61 million. The founder is Henri Mahal, and the investors are MetaCartel Ventures.

Source: DeFiLlama

Overall, Mode’s ecosystem is mainly focused on DeFi projects, which have relatively high interactive value. Mode is currently committed to cooperating with liquidity re-staking projects, which is beneficial to both parties. Mode can obtain more users and funds, and the tokens of liquidity re-staking projects will have more use cases.

Conclusion

Mode Network’s Layer2 solution exemplifies the evolution of decentralized finance by improving scalability, cutting costs, and motivating developers. It features “Sequencer Fee Sharing” and the “Mode Flare L3 Platform,” showcasing a dedication to innovation and community contribution.

Through strategic partnerships, Mode has lowered the entry barrier and shaped a thriving DeFi ecosystem. This approach ensures that Mode remains at the forefront of the future of DeFi, making it the DeFi Hub of the Op Superchain.