A Detailed Explanation of the OP Superchain Hot Project Mode Network
Mode Network is a modular Layer 2 focused on the DeFi track based on the OP Stack, utilizing Optimism's Bedrock upgrade, which can reduce costs by over 95% compared to the Ethereum mainnet.Author: Biteye Core Contributor Linke
Editors: Biteye Core Contributors Viee, Crush
Community: @BiteyeCN
01 Introduction
Mode Network is a modular Layer 2 focused on the DeFi track based on the OP Stack, utilizing Optimism's Bedrock upgrade, which can reduce costs by more than 95% compared to the Ethereum mainnet.
The project received a donation of $5.3 million from the Optimism Foundation in January 2024 (distributed 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.
02 Current Development Status
Steady growth, TVL ranks among the top
Mode launched its mainnet on January 31, 2024, and began a points airdrop in February.
Since the launch of the mainnet, TVL has been steadily increasing, ranking 13th among all Layer 2 networks as of March 19, 2024, with a TVL of $162 million, an average daily TPS of 1.62, and a median GAS of 0.001 Gwei, translating to an actual cost of less than $0.01, with a total of 2.12 million transactions in the past thirty days.
Airdrop in progress, interaction guide
The total supply of Mode tokens is 10 billion, with 5.5% allocated for airdrops; specific token economics have not yet been released.
Mode began its points airdrop in February, with plans to issue tokens in April. Users can earn airdrop tokens by accumulating points. Participate now to gain benefits in less than a month.
Currently, there are three ways to earn points:
Old user rewards: Web3 old users will receive a certain amount of initial points based on their previous blockchain interaction records when connecting their wallets. By bridging some assets (with no minimum amount required), they can activate these points;
Referral rewards: After activating points, users can obtain their exclusive invitation code, and the referrer will receive 16% of the points earned by the invited user;
Ecosystem interaction rewards: Interacting with Mode ecosystem applications can also earn points, with different types of projects offering different point rewards.
For developers, Mode implements:
Sequencer revenue rewards
Developer airdrop rewards
Optimism RPG funding rewards
The portion of airdrop rewards for developers consists of 500 million tokens, accounting for 5% of the total token supply. The airdrop for developers is not related to most users, so it will not be elaborated on in detail.
The specific interaction process for ordinary users is as follows:
Check in on the airdrop activity page (https://ref.mode.network/MDCKN9) to view initial points. If points are not visible and show "INELIGIBLE TO CLAIM," it indicates that the user is on a restricted IP and needs to change it.
Bridge assets: Users need to bridge assets from other networks to activate points and require ETH as gas fees for the airdrop activity. Users can use the official bridge or a third-party bridge. Using the official bridge only allows bridging assets from the mainnet, which incurs higher gas fees, and there is a seven-day waiting period for asset withdrawals. Alternatively, users can choose third-party cross-chain bridges like MiniBridge (https://minibridge.chaineye.tools/) to bridge assets from other Layer 2s to Mode, resulting in lower bridging costs.
Community administrators state that at least one use of the official bridge is required. It is recommended to use the official bridge first before using third-party bridges.
- Interact with applications: Users can interact with applications on Mode to earn points, with different applications offering different point rewards. Additionally, Mode has partnered with the LRT projects ether.fi and Renzo, both of which have relatively high TVL and sufficient funding, which is beneficial for increasing Layer 2's TVL.
Sharing the "two birds with one stone" strategy: you can bridge weETH tokens and ezETH to Mode, simultaneously earning staking rewards, Eigenlayer points, LRT protocol points, and Mode points, which helps improve capital utilization.
03 Project Dimension Analysis
Team Background
James Ross Founder of Mode Network graduated from the University of Sussex in the UK, majoring in Economics and Philosophy. He has invested in Eigenlayer and Ethena and previously served as an advisor at Hashflow.
Federico Sarquis Technical Lead of Mode Network previously organized events for Ethereum Argentina.
In terms of the team, Mode's LinkedIn page lists 15 employees, but the number of core employees is not large. Based on the employees' locations, they may be adopting a remote work model. The founder, James Ross, has been able to invest in Eigenlayer and Ethena, indicating a strong industry network.
Technical Aspects
Mode is a modular Layer 2 network based on OP Stack, and it has 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," you also need to understand OP Stack and Mode Flare.
1. Modular Blockchain
A modular blockchain focuses on handling a limited number of tasks while outsourcing the rest to one or more independent layers.
The purpose of modularity is to address the blockchain trilemma of security, decentralization, and scalability, a theory 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 space—Bitcoin, Ethereum, and Solana—have different emphases within the blockchain trilemma. Bitcoin has the strongest security and decentralization in the blockchain industry but has almost zero scalability. Solana has the lowest security and decentralization but boasts the best scalability among the three.
Modularity mainly involves dividing the consensus layer, execution layer, and data availability layer among different chains. For example, settling on Ethereum while using Celestia for data availability and executing through SVM on Solana allows different needs to be realized on different blockchains, thereby minimizing the impact of the "blockchain trilemma."
Modular Layer 2 projects include Mantle, Eclipse, and Boba Network. These projects are somewhat behind the leading Layer 2 projects but have gained new development opportunities through modularity.
It can be said that modularity is one of the key narratives of this bull market.
2. OP Stacks
The Stack service launched by the leading Layer 2 project Optimism has been adopted by many well-known projects, such as the Layer 2 Base developed by Coinbase, Debank Chain developed by asset management application Debank, and Farcaster Stack developed by the social protocol leader Farcaster. OP Stack has applications in multiple fields, aligning well with the initial concept of the OP Superchain.
The OP Superchain refers to a network composed of decentralized Layer 2s, where all Layer 2s share security, communication layers, and open-source technology stacks. These chains must meet specific standards to enhance interoperability between chains. Layer 2 projects using OP Stack services should generally be regarded as part of the OP Superchain.
According to L2beat data, as of March 10, 2024, the top five Layer 2 projects by TVL are Arbitrum, OP Mainnet, Blast, Manta Pacific, and Starknet, while Optimism ranks twenty-ninth in cryptocurrency market capitalization, and Arbitrum ranks forty-seventh. Their TVL rankings do not correspond to their token market cap rankings, primarily because Optimism's Stack service has been adopted by many projects, whereas Arbitrum has not, highlighting the narrative value brought by the Stack service. Thus, joining the OP Superchain is likely beneficial for project development at this time.
3. Mode Flare
Mode Flare is a Layer 3 network supported by Optimism and Celestia, designed for developers to deploy application chains, featuring high throughput, rapid deployment, EVM compatibility, and a flexible tech stack, with transaction fees below $0.005. Currently, three projects are preparing to launch on Mode Flare:
1) DEDPRZ, a cryptocurrency casino established using the $USA token and DEDPRZ NFT
2) Liq Market, a decentralized derivatives exchange
3) Macaw, a prediction market for betting on political events or news
Previously, some Layer 2 projects have launched Layer 3 projects, such as Arbitrum's Xai. These Layer 3s are primarily designed for cheaper gas fees and higher throughput, targeting high-interaction gaming tracks, with somewhat lower application value compared to Layer 2, but their potential for development is not low.
Mode Ecosystem
Next, let's outline some of the ecosystem projects that Mode has launched.
Ether.fi is a liquidity re-staking protocol based on the Ethereum mainnet within the Eigenlayer ecosystem, allowing users to re-stake ETH or other liquidity re-staking tokens to generate LRT tokens at a 1:1 ratio to obtain eETH.
Ether.fi is the leading protocol in the liquidity re-staking space, with a TVL of $2.67 billion and two rounds of financing totaling $32.3 million, with investors including CoinFund, North Island Ventures, and OKX Ventures.
Renzo is a liquidity re-staking protocol based on the Ethereum mainnet within the Eigenlayer ecosystem, allowing users to re-stake ETH or other liquidity re-staking tokens to generate LRT tokens at a 1:1 ratio to obtain ezETH. Renzo ranks third in the liquidity re-staking space, with Ether.fi first and Puffer Finance second, and has a TVL of $990 million. It 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, community-driven, providing customizable protocols and offering greater incentives to users through Mode's sequencer fee-sharing mechanism, with 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 rates on Mode and has designed a targeted economic model to balance the interests of both borrowers and lenders, with a TVL of $61 million. The founder is Henri Mahal, and the investor is MetaCartel Ventures.
Mode Name Service is a domain service provided by Space ID, with domain format .MODE. As of March 10, 2024, a total of 75.7k domains have been registered, with 70.3k holders.
LogX is a perpetual contract exchange that uses Bitcoin and Ethereum for trading, designed as a large aggregator that pools liquidity from different chains. Users do not need to manage gas fee tokens or execute multiple transactions for each operation, with a TVL of $11.21 million.
Poolshark is a decentralized protocol for directional liquidity, launched on Mode, Arbitrum, and Scroll, allowing liquidity pool depositors to create liquidity-only positions. Poolshark can provide limit order trading for professional traders on DEX, with a TVL of $595,000.
Layerbank is a full-chain lending protocol involved in multiple fields such as LSD, RWA, and LRT, currently launched on multiple Layer 2s including Manta, Bsquared, Mode, Linea, and Scroll, with a total TVL of $414 million, of which the TVL on Mode is $10.11 million.
Overall, Mode's ecosystem is primarily composed of DeFi projects, which have relatively high interaction value. Mode is currently working to collaborate with liquidity re-staking projects, which benefits both parties—Mode can gain more users and funds, while the tokens of liquidity re-staking projects gain more use cases.
04 Competitive Landscape of Modular Layer 2
Mode is a modular Layer 2 that uses OP Stack services, so we compare it with other projects that also use Stack services or modular Layer 2.
05 Conclusion
Mode is a modular Layer 2 project that uses OP Stack and focuses on the DeFi track. The OP Superchain created by OP Stack has attracted many well-known projects, which is beneficial for attracting users and expanding the ecosystem. At the same time, modularity is one of the key narratives of this bull market. The performance of public chains cannot solely rely on a single public chain; modularity helps leverage the strengths of various public chains, and thus leading modular projects have shown impressive performance.
Overall, Mode aligns well with the current development path of Layer 2, and its project outcomes are worth looking forward to. In terms of competitive landscape, Mode also performs well among similar projects, aiming to become the DeFi Hub of the OP Superchain, and its future development is worth monitoring.
References
[1] "New Modular Public Chain Mode Points Activity Participation Guide"
https://mirror.xyz/0x30bF18409211FB048b8Abf44c27052c93cF329F2/gGTssu0OL9PNCDKxp_erSH7OuIlpXyTKvYbEEzG1rX4
[2] "Binance Research Report: OP Stack Ecosystem and Innovation"
https://www.theblockbeats.info/news/45691?search=1
