Today we continue to look at the project, which is also an L2, launched on May 7th, with a current exchange rate of 0.05 US dollars, a market value of 65 million US dollars, and a FDV of 500 million US dollars. It has also just carried out a large number of airdrops, and the current popularity is still good. Then let's take a look at the situation of this project.
1. Introduction
Mode is a scalable DeFi L2 built on the Optimism Stack, and is also a modular L2. OP Stack is a set of standardized open source modules that can be assembled into a customized chain (Optimism calls it an OP chain) to serve any specific blockchain use case. We can understand OP Stack as a set of open source components that allow any developer to use Optimistic rollups to build their own Layer2 blockchain on top of Ethereum. Moreover, it moves most of the computing and storage to off-chain processing while retaining the security and finality of Ethereum.
Mode Network is known for its innovative revenue sharing model, which aims to empower developers and users to create an ecosystem of world-class applications and be directly rewarded through referral and contract-secured income. Rewarding developers and users by distributing sorter income not only increases the decentralization of DeFi, but also allows more people to benefit from network activities.
2. Core Mechanism
2.1（Optimistic Rollups）
The Optimistic Rollups technology used by Mode Network is a Layer 2 expansion solution designed to increase the scalability of Ethereum and reduce transaction costs. This technology is implemented by running an independent execution layer on top of the Ethereum mainnet, thereby significantly increasing transaction processing speed without sacrificing security.
2.1.1 Principle and working mechanism
1. Batch processing:
Optimized volume technology combines multiple transactions into a batch and then submits the data of these transactions to the Ethereum mainnet at one time. This approach reduces the need for each transaction to undergo state transitions and verification independently, thereby reducing transaction costs.
2. Delayed confirmation:
In optimized volumes, transactions are confirmed on Layer 2 immediately once they are included in a batch, without waiting for confirmation on the Ethereum mainnet. This provides a fast transaction experience. However, the final validity of these transactions still depends on subsequent verification on the mainnet.
3. Proof of Fraud:
Optimized volume relies on an "optimistic" assumption that all transactions and batches are processed honestly. If someone believes a batch contains fraud, they can submit a fraud proof to challenge the batch. If the challenge is successful, the fraudulent batch will be revoked and the associated transactions will be rolled back.
4. Rollback and Security:
Optimized volumes provide an additional layer of security because any transaction must ultimately be settled on the Ethereum mainnet. This means that even if errors or malicious behavior occur on Layer 2, they can be corrected on the mainnet, ensuring the safety of funds.
2.2 Sorter Fee Sharing
Mode Network’s sorter fee sharing mechanism is an important part of the network’s core economic model, designed to incentivize developers to create and maintain applications on the platform while increasing user engagement.
This mechanism is achieved through the following key features:
2.2.1 Concept of Sequencer Fees
In the Layer 2 solution using optimized volume technology, the sequencer is a key role, responsible for collecting and sorting transactions in the network, and then submitting them to the Ethereum main network in batches. This process requires a fee to be paid to the Ethereum mainnet, but since transactions are processed in batches, the average cost per transaction is significantly reduced. The sequencer thus generates revenue in the network, which is primarily derived from transaction fees paid by users.
2.2.2 Cost Sharing Mechanism
1. Income distribution:
Developer Incentives: Mode Network has created a mechanism that allows developers to receive a portion of the sorter revenue by registering their smart contracts to a specific fee sharing contract. This practice encourages developers to create and maintain high-frequency trading applications because these applications are able to generate more transactions, thereby bringing more sorter revenue.
User Rewards: Part of the sorter revenue is also used to reward network users, especially those who join the network by recommending new users. This referral mechanism encourages existing users to promote the network, helping the network increase its user base and activity.
2. Contract Registration:
Developers must link their smart contracts to the fee sharing contract in order to benefit from it. This usually involves programming the contract to include specific code snippets to ensure transactions are tracked and rewards are distributed correctly.
3. Transparency and Automation:
The specific proportion and distribution rules of fee sharing are transparent on Mode Network and automatically executed through smart contracts, ensuring the fairness and transparency of operations. This automated distribution mechanism reduces potential disputes and enhances the trust of the network.
2.2.3 Advantages and Impact
Incentivizing innovation: By providing financial incentives to developers, Mode Network encourages more developers to participate and innovate, bringing more and more diverse applications.
Increased activity: The user reward mechanism increases user participation, making users more inclined to use and recommend Mode Network, thereby enhancing the activity and expansion speed of the network.
Ecosystem growth: With the emergence of more high-quality applications and the increase in the user base, the entire ecosystem can grow rapidly, enhancing the overall value and attractiveness of the network.
2.3 Modularity and Cooperation Model
Modularity is also based on the capabilities of the OP stack, which separates the consensus, execution, and data layers to maximize security.
Consensus layer: Mode Network may use independent modules to handle transaction verification and consensus mechanisms to ensure the security and integrity of the network.
Execution layer: A modular layer that executes smart contracts and processes transactions, which can optimize resource usage and increase processing speed.
Data layer: independently handles data storage and access to improve efficiency and scalability.
Interaction layer: responsible for interfaces with users and external systems, such as APIs and front-end interfaces, to ensure good user experience and system interoperability.
2.4Mode Network Bridge
Mode Network Bridge is a key component provided by Mode Network in its Layer 2 solution, which allows users to efficiently and securely transfer assets between the Ethereum mainnet and the Mode Layer 2 network. The main purpose of this bridge is to simplify cross-chain operations for users while maintaining a high level of security and low transaction costs.
Token Economy
The total number of tokens is 10,000,000,000, the initial circulation volume is 1,300,000,000, and the current exchange rate is 0.05 USD. In terms of token distribution, 35% was given to airdrops, 19% to core contributors, 19% to investors, and 27% to foundations. So a large amount of airdrops were given. The release is almost a linear release, with a cycle of 2 years.
The current TVL is 450 million US dollars, and it is also in a state of continuous growth.
Then let's compare OP. OP's current TVL is 800 million US dollars, and OP's FDV is 10 billion. ARB's current TVL is 2.5 billion, and FDV is 10 billion, which means the FDV to TVL ratio is 4:1. OP's ratio is a bit exaggerated, which is 12:1, while Mode's current FDV to TVL ratio is 1:1.
So from this perspective, Mode is still in an undervalued range.
Finally, let me summarize this project. This project is also an L2, built on the OP stack. The OP stack is equivalent to the Cosmos SDK, which allows you to easily build a chain. So there is nothing special about it technically. The main concept is to share the saved GAS fees with developers and users, which is a bit tasteless, because if developers rely on this gas fee, then don’t play. Developers definitely hope to make money by using applications, or make more money by issuing coins. Then there is the current TVL, which is still quite bright, and is in an underestimated range. However, the project has just been launched, and it still needs to be observed, because the project’s token release cycle is only 2 years, which is relatively short, and there may be a large amount of emissions in the future. As for the strategy of tokens, we still talk about it in the planet.
