Forward the Original Title：一文详解 OP 超级链热门项目 Mode Network

01 Introduction

Mode Network is a modular Layer 2 based on OP Stack focusing on the Defi track. It adopts Optimism’s Bedrock upgrade and can reduce costs by more than 95% compared to the Ethereum main network.

The project received a $5.3 million donation from the Optimism Foundation in January 2024 (issued in the form of op tokens). Mode will also donate part of the sequencer income to the Optimism Collective. Mode maintains a relationship with the Optimism Foundation, which is beneficial for project development.

02 Development status

Steady growth with top TVL

Mode will be launched on the mainnet on January 31, 2024, and points airdrops begin in February.

TVL has been growing steadily since the launch of its own network. As of March 19, 2024, TVL ranked 13th among all Layer 2 networks, at 162million U.S. dollars, with an average daily TPS of 1.62 and a median GAS of 0.001Gwei, which translates into actual cost of less than $0.01, with a total of 2.12 million transactions occurring in the past thirty days.

While the airdrop is in progress, interactive guide

The total supply of Mode tokens is 10 billion, of which 5.5% will be used for airdrops. The specific tokenomics have not yet been released.

Mode started airdropping points in February and is expected to issue tokens in April. Users can obtain airdrop tokens by accumulating points. Participate now and you can see returns in less than a month.

Currently, there are three ways to earn points:

• Rewards for old users: When old Web3 users use wallet connections, they will receive certain initial points based on their original blockchain interaction records, which can be activated through some cross-chain assets (no amount required);
• Referral Rewards: After activating their points, users can get their exclusive invitation code. The inviter will receive 16% of the invitee’s points reward.
• Ecological Interaction Rewards: Interacting with Mode ecological applications can also earn points, with different types of projects yielding different points rewards.

For developers, Mode implements:

• Sequencer income rewards
• Developer airdrop rewards
• Optimism RPG financing rewards

The airdrop reward for the developer part is 500 million tokens, accounting for 5% of the total token quantity. The developer airdrop has no relevance to most users, so it won’t be explained in detail.

The specific interaction process for ordinary users is as follows:

1. Check in at the airdrop activity page (https://ref.mode.network/MDCKN9) to see the initial points. If you can’t see the points and it shows “INELIGIBLE TO CLAIM”, it means the user is currently under a restricted IP and needs to change it.
   

1. Bridging assets, users need to activate points from other network bridging assets, and ETH is required as gas fee for airdrop events. You can use official bridges or third-party bridges to bridge assets. Using official bridges can only bridge assets from the main network, which will incur higher gas fees,and there is a seven-day asset manifestation waiting period when withdrawing. Alternatively, you can choose third-party cross-chain bridges like MiniBridge (https://minibridge.chaineye.tools/) to bridge assets from other Layer2s to Mode, resulting in relatively lower bridging costs.

Community administrators have stated that at least one use of the official bridge is necessary. It is recommended to use the official bridge first, then use third-party bridges.

1. Interact with applications: Users can interact with applications on Mode to earn points, with different applications offering different amounts of points. Additionally, Mode has collaborated with LRT projects ether.fi and renzo, both of which have a high TVL and sufficient funds, contributing to the increase of Layer2’s TVL.

The ‘killing two birds with one stone’ strategy: By bridging weETH tokens and ezETH to Mode, users can simultaneously earn staking profit, Eigenlayer points, LRT protocol points, and Mode points, enhancing the utilization rate of funds.

03 Analysis of various dimensions of the project

Team background

James Ross, Founder of Mode Network

Graduated from the University of Sussex in the UK, majoring in Economics and Philosophy. He invested in Eigenlayer and Ethena, and worked as a consultant at Hashflow.

Federico Sarquis, Technical Director of Mode Network

Previously has previously organized events for Ethereum Argentina.

In terms of the team, Mode’s LinkedIn page lists a total of 15 employees, but the number of core staff is not large. Looking at the staff’s base, they may have adopted a remote work style. Founder James Ross’ investment in Eigenlayer and Ethena suggests he has good industry connections.

Technical Aspect

Mode is a modular Layer2 network based on OP Stack. Currently, Mode Flare, a Layer3 network powered by Optimism and Celestia, has been launched and is suitable for the development of on-chain games and trading platforms. In terms of technology, in addition to the concept of “modularity”, you also need to understand OP Stack and Mode Flare.

1. Modular blockchain

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

The purpose of modularity is to solve the blockchain trilemma, i.e., security, decentralization, and scalability. This theory was proposed by Vitalik, the founder of Ethereum, 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 track at the moment, Bitcoin, Ethereum, and Solana, have different emphases in the blockchain trilemma. Bitcoin has the strongest security and decentralization in the blockchain industry, but its scalability is almost zero. Solana definitely has the lowest security and decentralization, but it has the best scalability among these three.

Modularity mainly assigns the consensus layer, execution layer, and data availability layer to different chains. For example, settle on Ethereum, use Celestia for data availability, and execute on Solana with SVM. By layering, different needs can be implemented on different blockchains, thereby minimizing the impact of the “blockchain trilemma”.

Modular Layer2 includes Mantle, Eclipse, Boba Network, etc. These projects actually have some gaps with the head projects of Layer2, but they all win some new development opportunities through modularity.

It can be said that modularity is one of the important narratives of this bull market.

2、Op stacks

Op Stacks is a Stack service launched by the head project of Layer2, Optimism. Many well-known projects have adopted Op Stacks, including the Layer2 Base developed by Coinbase, the Debank Chain developed by Debank, a digital asset management application, and the Farcaster Stack developed by the leading social protocol, Farcaster. Op Stack has been applied in projects across multiple fields, aligning well with the concept of the Op Superchain when Op Stack was first launched.

The Op Superchain refers to a network composed of dispersed Layer2s. In this network, all Layer2s share security, communication layers, and open-source technology Stacks. These chains must conform to specific standards to enhance interoperability between chains. Layer2 projects that use Op Stack services should typically be seen as members of the Op Superchain.

According to L2beat data, as of March 10, 2024, the projects ranked in the top five for Layer2 TVL are Arbitrum, OP Mainnet, Blast, Manta Pacific, and Starknet. Optimism ranks 29th in cryptocurrency market value, while Arbitrum ranks 47th. Their TVL rankings do not correspond with their token market value rankings. The key reason lies in the fact that Optimism’s Stack service is used by many project parties, while Arbitrum is not. This is the narrative value brought by the Stack service. Therefore, joining the Op Superchain should be beneficial for project development at present.

3、Mode Flare

Mode Flare, a Layer3 network supported by Optimism and Celestia, is designed for developers to deploy application chains. It has characteristics such as high throughput, fast deployment, EVM compatibility, and a flexible tech stack. The transaction fee is less than $0.005. Currently, three projects are preparing to launch on Mode Flare:

1) DEDPRZ, a cryptocurrency casino established with $USA tokens and DEDPRZ NFTs.

2) Liq Market, a decentralized derivative exchange.

3) Macaw, a prediction market for betting on political events or current news.

Some Layer2 projects have previously launched Layer3 projects, such as Arbitrum’s Xai. These Layer3 projects are mainly designed for cheaper gas fees and higher throughput. They are aimed at game tracks with high interactive characteristics, and their application value is higher than that of Layer2 projects. Although their application value is somewhat inferior to Layer2, their potential for development is not low.

Mode Ecosystem

Next, let’s sort out some of the ecosystem projects that Mode has launched.

• Ether.fi is a 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 receive eETH at a 1:1 ratio.
• Ether.fi is the leading protocol in the liquidity re-staking track, with a TVL of 2.67 billion USD. It has raised 32.3 million USD in two rounds of financing, with investors including CoinFund, North Island Ventures, and OKX Ventures.
• 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 receive ezETH at a 1:1 ratio. Renzo ranks third in the liquidity re-staking track, with Ether.fi first and Puffer Finance second. Its TVL is 990 million USD. It raised 3.2 million USD in seed funding, with notable investors including Binance Labs, OKX Ventures, IOSG Ventures, and Robot Ventures.
• Kim Exchange is Mode’s native decentralized exchange driven by the community. It offers customizable protocols and provides greater incentives to users through Mode’s sequencer fee-sharing mechanism. Its TVL is 6.45 million USD.
• 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 beneficial for balancing the interests of borrowers and lenders. Its TVL is 61 million USD. The founder is Henri Mahal, with investors including MetaCartel Ventures.
• Mode Name Service is a domain service provided by Space ID. The domain format is .MODE. As of March 10, 2024, a total of 75.7k domains have been registered, with a total of 70.3k holders.
• LogX is a perpetual contract exchange using Bitcoin and Ethereum. It is designed as a large-scale aggregator, bringing together liquidity from different chains. Users do not need to manage Gas fee tokens or execute multiple transactions for each operation. Its TVL is 11.21 million USD.
• Poolshark is a decentralized protocol for directional liquidity. It has been launched on Mode, Arbitrum, and Scroll. With directional liquidity, pool depositors can create liquidity positions for sale only. Poolshark can provide limit order trading on dex for professional traders. Its TVL is 595,000 USD.
• Layerbank is a multi-field lending protocol involved in LSD, RWA, LRT, etc. It has been launched on multiple Layer2s including Manta, Bsquared, Mode, Linea, and Scroll. Its TVL is 414 million USD, with Mode’s TVL at 10.11 million USD.

Overall, Mode’s ecosystem is primarily Defi projects, which have relative interaction value. Mode is currently striving to cooperate with liquidity re-staking projects, which benefits both parties - Mode can gain more users and capital, and the tokens of liquidity re-staking projects have more use cases.

04 Competitive Landscape of Modular Layer2

Mode is a modular Layer2 that uses the Op Stack service, therefore, other Layer2 projects that utilize Stack services or are modular are selected for comparison.

05 Summary

Mode is a modular Layer2 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 to expand the ecosystem. Meanwhile, modularization is a key narrative in this bull market. The improvement of public chain performance cannot solely rely on the same public chain. Through modularization, the advantages of various public chains can be utilized, and therefore, leading modular projects have shown remarkable performance.

Overall, Mode aligns well with the current development path of Layer2, and its project results are promising. Looking at the competitive landscape, Mode has performed well among similar projects and aspires to become the DeFi Hub of the Op Superchain. Its future development is worthy of attention.

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