Mode Network is a modular Layer2 project based on the OP Stack, focusing on the Defi sector. It has adopted Optimism’s Bedrock upgrade, which reduces costs by over 95% compared to the Ethereum mainnet.
Development Status
Steady growth, ranking high in TVL
Airdrop in progress, interactive guide
Project Analysis from Various Dimensions
Team Background
Mode Ecosystem
Competitive Landscape of Modular Layer2
Conclusion
Mode Network, a modular Layer2 project focusing on Defi in the OP Stack, received a $5.3 million donation (in the form of OP tokens) from the Optimism Foundation in January 2024. Mode will also donate a portion of its sorter revenue to the Optimism Collective, maintaining a good relationship between Mode and the Optimism Foundation, which is beneficial to the project’s development.
Mode went live on the mainnet on January 31, 2024, and launched its token airdrop in February.
Since its mainnet launch, TVL has steadily increased. As of March 19, 2024, it ranked 13th among all Layer2 networks with a TVL of $162 million. The average daily TPS is 1.62, with a median gas price of 0.001 Gwei, equivalent to less than $0.01 in actual cost. There have been a total of 2.12 million transactions in the past 30 days.
The total supply of Mode tokens is 10 billion, with 5.5% allocated for the airdrop. The specific token economics have not been released yet.
The token airdrop started in February, and the token distribution is expected to take place in April. Users can earn airdrop tokens by accumulating points. Participating now allows users to earn profits in less than a month.
There are three ways to earn points:
1. Rewards for existing users: Web3 users will receive initial points based on their blockchain interaction records. These points can be activated by cross-chain assets (no minimum amount required).
2. Referral rewards: Users can receive their own unique referral code after activating points. The inviter will receive 16% of the points earned by the invitee using the referral code.
3. Ecological interaction rewards: Interacting with Mode’s ecosystem applications can also earn points. Different types of projects will receive different point rewards.
For developers, Mode implements:
– Sorter revenue rewards
– Developer airdrop rewards
– Optimism RPG funding rewards
Developer airdrop rewards consist of 500 million tokens, accounting for 5% of the total supply. These rewards are unrelated to most users and will not be further explained.
For regular users, the specific interaction process is as follows:
1. Check the initial points on the check-in airdrop activity page (https://ref.mode.network/MDCKN9). If points are not visible and “INELIGIBLE TO CLAIM” is displayed, it means the user is on a restricted IP and needs to change it.
2. Bridge assets: Users need to bridge assets from other networks to activate points and require ETH as gas fee for the airdrop activity. Official bridges or third-party bridges can be used. Official bridges only allow bridging assets from the mainnet but have higher gas fees and a seven-day asset withdrawal waiting period. Alternatively, users can choose third-party cross-chain bridges like MiniBridge (https://minibridge.chaineye.tools/) to bridge assets from other Layer2 networks to Mode, which incurs lower bridge fees.
Community administrators recommend using the official bridge at least once before using third-party bridges.
3. Interact with applications: Users can interact with applications on Mode to earn points. Different applications offer different point rewards. Additionally, Mode has partnered with lrt projects ether.fi and renzo, both of which have high TVL and sufficient funds, which helps increase Layer2 TVL.
James Ross
Founder of Mode Network
James Ross graduated from the University of Sussex in the UK, majoring in economics and philosophy. He has invested in eigenlayer and ethena and previously worked as an advisor at Hashflow.
Federico Sarquis
Technical Lead of Mode Network
Federico Sarquis previously organized events for Ethereum Argentina.
In terms of the team, Mode’s LinkedIn page shows a total of 15 employees, but the core team is not large. Based on the employees’ locations, they may be adopting remote work. As James Ross is able to invest in eigenlayer and ethena, he likely has a good industry network.
Technical Aspect
Mode is a modular Layer2 network based on the OP Stack. It has already launched Mode Flare, a Layer3 network supported by Optimism and Celestia. Mode Flare is suitable for deploying gaming and trading platforms on the development chain. In terms of technology, besides the concept of “modularity,” you also need to understand OP Stack and Mode Flare.
1. Modular Blockchain
Modular blockchain refers to focusing on processing a few tasks and outsourcing the rest to one or more independent layers of blockchain.
The purpose of modularity is to solve the blockchain trilemma, which refers to the impossibility of achieving security, decentralization, and scalability at the same time. This theory was proposed by Ethereum founder Vitalik and is considered one of the standards for evaluating public chain projects.
We can see that the three most well-known projects in the public chain sector, Bitcoin, Ethereum, and Solana, have different focuses in the blockchain trilemma. Bitcoin has the strongest security and decentralization in the blockchain industry but almost zero scalability. Solana has the best scalability among the three but has the lowest security and decentralization.
Modularity mainly divides the consensus layer, execution layer, and data availability layer among different chains. For example, settlement can be done on Ethereum while using Celestia for data availability and executing on Solana using SVM. By layering and dissociating different needs, it is possible to implement different requirements on different blockchains, thereby minimizing the impact of the “blockchain trilemma.”
Modular Layer2 projects include Mantle, Eclipse, Boba Network, etc. These projects may have some differences compared to top Layer2 projects but have gained new development opportunities through modularity.
Modularity is one of the important narratives of this bull market.
2. OP Stacks
OP Stacks are stack services launched by top Layer2 project Optimism. Many well-known projects have adopted OP Stacks, such as Layer2 Base developed by Coinbase, Debank Chain developed by Debank, and Farcaster Stack developed by leading social protocols Farcaster. OP Stacks have been applied in various project fields, aligning with the initial vision of OP Super Chain.
OP Super Chain refers to a decentralized network composed of decentralized Layer2s. In this network, all Layer2s share security, communication layer, and open-source technology stack. These chains must meet specific standards to enhance inter-chain interoperability. Layer2 projects using OP Stack services should generally be considered as members of the OP Super Chain.
According to L2beat data, as of March 10, 2024, the top five Layer2 projects in terms of TVL are Arbitrum, OP Mainnet, Blast, Manta Pacific, and Starknet. Optimism ranks 29th in terms of cryptocurrency market capitalization, while Arbitrum ranks 47th. The TVL ranking does not necessarily correspond to the token market capitalization, and the key reason is that Optimism’s Stack services have been adopted by many projects, while Arbitrum has not. This demonstrates the narrative value brought by Stack services. Therefore, joining the OP Super Chain should be beneficial for project development.
3. Mode Flare
Mode Flare is a Layer3 network supported by Optimism and Celestia, designed for developers to deploy application chains. It features high throughput, fast deployment, EVM compatibility, and a flexible technical stack. The transaction fee is less than $0.005. Currently, three projects are preparing to go live on Mode Flare:
1) DEDPRZ, a cryptocurrency casino built with the USA token and DEDPRZ NFT.
2) Liq Market, a decentralized derivatives exchange.
3) Macaw, a prediction market for political events or current affairs.
There have been other Layer2 projects that have launched Layer3 projects, such as Arbitrum’s Xai. These Layer3 projects are mainly designed for cheaper gas fees and higher throughput, targeting high-interaction games. They have slightly less application value compared to Layer2, but their limitations are not low as a development direction.
Next, let’s review the ecosystem projects that Mode has launched.
Ether.fi is a liquidity re-collateralization protocol in the Eigenlayer ecosystem based on the Ethereum mainnet. It allows users to re-collateralize ETH or other liquidity re-collateralization tokens to generate lrt tokens, earning eETH at a 1:1 ratio.
Ether.fi is the leader in the liquidity re-collateralization sector with a TVL of $2.67 billion. It has raised a total of $32.3 million in two funding rounds, with investors including CoinFund, North Island Ventures, and OKX Ventures.
Renzo is a liquidity re-collateralization protocol in the Eigenlayer ecosystem based on the Ethereum mainnet. Users can re-collateralize ETH or other liquidity re-collateralization tokens to generate lrt tokens, earning ezETH at a 1:1 ratio. Renzo ranks third in the liquidity re-collateralization sector, with Ether.fi in first place and Puffer Finance in second. Its TVL is $990 million, and it has raised $3.2 million in seed funding, with investors including Binance Labs, OKX Ventures, IOSG Ventures, and Robot Ventures.
Kim Exchange is Mode’s native decentralized exchange driven by the community. It provides customizable protocols and offers greater incentives to users through Mode’s sorter revenue sharing mechanism. It has a TVL of $6.45 million.
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 lenders and borrowers. It has a TVL of $61 million. The founder is Henri Mahal, and the investors include MetaCartel Ventures.
Mode Name Service is a domain name service provided by Space ID. The domain name format is .MODE. As of March 10, 2024, a total of 75.7k domain names have been registered, with a total of 70.3k holders.
LogX is a sustainable contract exchange for trading Bitcoin and Ethereum. It is designed as a large aggregator that consolidates liquidity from different chains. Users do not need to manage gas fee tokens or execute multiple transactions for each operation. It has a TVL of $11.21 million.
Poolshark is a decentralized protocol for targeted liquidity. It has been launched on Mode, Arbitrum, and Scroll, three Layer2 networks. By providing targeted liquidity, fund pool providers can create liquidity-only positions. Poolshark enables professional traders to place limit orders on decentralized exchanges. It has a TVL of $595,000.
Layerbank is a full-chain lending protocol that covers multiple domains such as LSD, RWA, and LRT. It has been launched on multiple Layer2 networks, including Manta, Bsquared, Mode, Linea, and Scroll. Its TVL is $414 million, with Mode’s TVL being $10.11 million.
Overall, Mode’s ecosystem is mainly focused on Defi projects, which have interactive value. Mode is currently working on collaborations with liquidity re-collateralization projects, which benefits both parties — Mode can attract more users and funds, and liquidity re-collateralization tokens have more use cases.
Mode is a modular Layer2 project that uses OP Stack services, making it suitable for comparison with other projects that use Stack services or modular Layer2 projects.
Mode is a modular Layer2 project that uses OP Stack services and focuses on the Defi sector. OP Super Chain, created by OP Stack, has attracted many well-known projects, which helps attract users and grow the ecosystem. Additionally, modularity is one of the key narratives of this bull market. Enhancing the performance of public chains cannot solely rely on a single chain. By leveraging modularity, the advantages of different public chains can be utilized. Therefore, modular leading projects have shown impressive performance in this round.
Overall, Mode aligns well with the current development path of Layer2, and its project achievements are worth anticipating. From a competitive landscape perspective, Mode has performed well among similar projects. It aspires to become the DeFi Hub of the OP Super Chain, and its future development is worth paying attention to.