We are excited to work with you situationthe first L2 to implement Modern Voting Assurance (VE) and a metric-based governance model. This advance in applying standards and metrics to the backlog ecosystem provides a dynamic governance model that enhances incentive alignment, reduces coordination burdens, and stimulates network growth.
Tldr:
- There are no long-term lock-in requirements, and token holders can stake or cancel stakes at any time during the warm-up and cool-down periods;
- veStaker supports multiple codes: MODE and BPT (80/20 MODE/WETH);
- Staking tokens increase voting power exponentially with each epoch;
- Pledgers allocate a percentage of their voting power to direct reward meters;
- Rewards go to protocols in the network, rather than liquidity pools;
- Stakeholders receive $OP rewards for participating in governance;
- Incentives change with each season.
- Community members participate, vote, and claim rewards directly in the Mode Governance Hub.
As an AIFi-focused L2, Mode builds infrastructure, assets, and applications to scale decentralized finance (DeFi) to billions of users globally. The mode is powered by Optimism’s OP stack and works in conjunction with Optimism to build a Superchain. By drawing on successes and lessons learned throughout the history of DeFi governance, Mode is paving the way for a new chapter in governance.
Mode brought together a group of industry leaders to update metrics-based governance for this new use case, including experts from Balancer, Aura, Aragon, and others. This collaboration has led to breakthroughs that have pushed governance toward deeper incentive alignment, reduced coordination burdens, and ecosystem growth.
This solution encourages participation in governance by incentivizing voters with massive voting power and rewards, without imposing long-term detentions. veMODE and veBPT holders can then allocate their voting power to the metering devices that direct the distribution of rewards among protocols on the network. Both veMODE incentives and protocols adapt from season to season, keeping governance responsive and adaptable to ecosystem and market dynamics.
With their new approach requiring custom governance contracts and the need to constantly adapt in the future, Mode chose to build on Aragon OSx. Aragon OSx is a next-generation modular DAO framework built on a battle-tested foundation and optimized for adaptability.
Here are the details of Mode’s new integrated management solution, from contracts to the user interface:
We worked together with Mode to build a custom veStaker with new features:
- Users can stake two different types of tokens in one position:
- veMODE,obtained by signing MODE codes;
- veBPTobtained by staking MODE/ETH Balancer liquidity tokens.
This new feature opens up the possibility of allocating dynamic voting power across different stakeholder groups, providing dual incentives and governance capabilities. It also creates a more inclusive base for stakeholders to participate in governance. Token holders who provide liquidity to the MODE/ETH pool receive fee revenue from trading activity, while contributing to supporting healthy on-chain liquidity for the MODE token. They serve an essential function of the ecosystem, and it is important to include them in the management process.
- Voting power increases dramatically over time: Season 3 of the mode is divided into six eras where voters can dramatically increase their voting power (up to 6x if they stake throughout all six eras) by storing their tokens for a longer period.
- No long-term locking requirements: There are no long-term lock-in requirements – token holders can stake or unstake at any time. There is simply a short warm-up period before veTokens can participate in management and a short cool-down period before non-stable tokens, to ensure predictability and security in voting.
Allocating the five contracts is a complex endeavor. Building on the lessons learned from the existing five models, we have created a model contract library that allows projects to customize parameters safely, easily and with greater precision. This enabled the Mode team to design a unique implementation of the five governances, without having to rely on resources from their development team.
Mode implements a metric-based system of governance that enables veMODE and veBPT holders to determine the distribution of rewards among protocols on the network. Protocols compete for a share in the incentive pool, which is allocated based on the percentage of votes earned. Cross-protocol reward allocation is a new approach that uses incentives strategically to promote network growth.
Metrics-based governance also reduces coordination burdens and voter fatigue, as token holders only need to allocate their voting power once, and can reallocate every period. There is no need to constantly vote on direct incentives. In this system, token holders also no longer need to keep relocking for the maximum duration in order to maximize their voting power and payouts.
In collaboration with Mode, we have built a custom governance plugin that allows users holding veTokens to allocate their voting power to a pre-defined list of options. Voters can then decide what percentage of voting power they wish to allocate to each option. Users who participate in metric-based voting will receive $OP rewards. Rewards will be distributed to both protocols and users primarily via Merkel.
Aragon OSx allows any governance logic to be programmed and implemented. New governance rules are isolated in additional components, making new forms of governance more secure and easier to develop. Once the plugin is published, any DAO can install it using the Aragon OSx plugin repository, enhancing an interoperable governance ecosystem across the Ethereum community.
Mode’s management system is deployed and managed by the Aragon OSx DAO, and can therefore adapt as the community evolves its management and incentive model. The mode plans to iterate and adjust the incentives for each individual season. This structured continuous improvement process allows Mode to easily apply lessons learned from previous seasons and remain adaptive to market dynamics. With a plug-in architecture that allows decentralized autonomous organizations (DAOs) to safely and easily change their management logic, Aragon OSx ensures a secure and predictable upgrade path.
Finally, the Mode community has a dedicated place to participate in governance and guide the growth of the second language ecosystem. Everything from staking to sharing metering is in one unified user interface. Governance Hub has all the features users need to engage in a familiar interface that matches Mode’s branding, ensuring an intuitive and seamless community experience.
The Governance Center is built using our governance implementation model. It allows projects to easily deploy a unique interface to interact with custom governance contracts, including the flows, features, and information needed to participate. Having a dedicated governance UI prevents users from having to navigate between management platforms. This not only greatly improves the user experience, but also ensures continuity between the project brand, products and management system.
This is only the beginning of the situation. Management incentives will adapt from season to season, and lessons learned will be applied over time. The community will directly shape how New Mode’s approach to governance evolves.
We are dividing five contracts into modules to make it easier for projects to modify five models to meet the needs of their ecosystems and communities. To learn more about implementing a custom template for your project, contact here.