Airdrop applications will open soon, and a quick look at Mode Network (MODE) valuation expectations

Original | Odaily Planet Daily

Author | Azuma

During the May Day period, Mode Network, a Layer 2 network built on the OP Stack, announced that **will launch the governance token MODE on May 7, and will officially open the Airdrop claim for the first season at 11:00 UTC (19:00 Beijing time), and the claim homepage (Claim.mode.network) is currently open, but the specific Airdrop allocation amount cannot be seen for the time being.

Overview of Mode Network basics

From the perspective of positioning, Mode Network is a modular Layer 2 network focused on Decentralized Finance services, which is built on the OP Stack and has built the Layer 3 network Mode Flare by integrating Celestia’s DA solution.

Different from other Layer 2, the biggest feature of **Mode Network is that it will protocol layer a shared incentive mechanism with built-in contract revenue, and share part of the profits from the sequencer, so that Dapps and users have the economic motivation to work together. **

L2BEAT data shows that Mode Network’s current total lock-up position value (TVL) is about $603 million, ranking 10th among all Layer 2, and only about $200 million short of more well-known Layer 2 such as zkSync Era and Linea.

In terms of ecological territory, Mode Network has officially mentioned that the network has integrated hundreds of external applications, such as The Graph, LayerZero, Pyth, Etherfi, Renzo, Safe, etc., and the network also has more than 30 native applications, including Ionic, KIM, Ironclad, etc. As it is positioned, the types of applications on the Mode Network are also mainly Decentralized Finance services.

In terms of network activity, as of the end of the first quarter airdrop, Mode Network had a total of 450,000 active addresses, with a total of about 20 million transactions.

MODE Token Economic Model

In terms of utility, MODE will play two roles on top of the Mode Network, one is to determine the future development direction of the network as a governance token, and the other is to serve as an incentive medium to promote the ecological development of the network.

**The total supply of MODE is 10 billion, of which the initial circulating supply will be 1.3 billion, and the circulating share will come partly from the Q1 Airdrop rewards, and partly from the Foundation and on-chain treasury. **In terms of allocation mechanism, the allocation details of MODE are as follows:

• 35% of the MODE will be used for user and developer Airdrop, of which 5.5% will be allocated to the Airdrop in the first quarter, 5% will be allocated to the Airdrop in the second quarter, and the remaining Tokens will be gradually distributed in future Airdrop rounds; 19% of the MODE will be distributed to investors, and this part of the Token will be Lock-up Position for 12 months, after which it will be released linearly over 24 months; 19% of the MODE will be allocated to early contributors, and this part of the Token will also be Lock-up Position for 12 months, after which it will be released linearly over 24 months;
• 27% of MODE will be vesting to the foundation and on-chain treasury for ecological development incentives.

It is worth mentioning that Mode Network has officially explained the operation mechanism of the foundation and the on-chain treasury, in which the foundation Token is mainly responsible for funding and supporting ecological projects, and the use of on-chain treasury Token needs to be resolved through community governance, and then docked to major applications in the form of incentives. **This also means that in the early stage of MODE TGE, less than 550 million of the 1.3 billion circulating shares may be less than 550 million Q1 Airdrop shares (some Airdrops will also be lock-up position, more on this below) are in an absolute circulating state. **

Analysis of Airdrop Mechanism

Similar to the current long project selection, Mode Network also uses a points mechanism to measure community contributions, and users can accumulate points by bridge assets to the network and use various applications, and the amount of points will affect the final Airdrop share.

On May 5th, Mode Network ended its first season of Airdrop campaign, and users who had previously used the network and accumulated points (subject to a certain unannounced minimum threshold) had a chance to receive the project. However, Mode Network also mentioned that Snapshot will be taken before May 7, and if users withdraw funds before then, their share of the Airdrop may change. **

In addition, in order to limit the potential selling pressure from the Large Investors, Mode Network will set a certain Airdrop Lock-up Position limit on the top 2000 Address in terms of points - 50% can be claimed at Airdrop launch, and another 50% can be claimed after 90 days, and during this period, users must keep their assets on the Mode Network, otherwise they will be slashing proportionally, and slashing Token will flow to the second season Airdrop event.

According to the Airdrop rules, the claim window for the first season MODE Airdrop will last for 30 days, and the unclaimed Tokens will be distributed to developers and users as future rewards.

Immediately after the end of the first season event, Mode Network launched the second season of the Airdrop event. Season 2 event will run from May 5th to September 6th, a total of 5% Token share will be distributed, and users of the first season event will receive a certain amount of points accelerated in the second season event.

MODE Valuation Expectations

Although MODE has not yet been TGE, some pre-market trading markets have opened OTC trading of MODE in advance, which may be used as a reference for data after MODE opens for application tonight.

According to Whale Markets data, the current OTC trading price of MODE within the platform is $0.11, corresponding to an initial circulating market capitalization (MC) of $143 million and a full circulation valuation (FDV) of $1.1 billion. **

Previously, since the valuation model of Layer 2 itself was relatively clear, we could also value the TVL by weighting it and combining the MC and FDV status of existing Layer 2 projects.

As you can see in the chart above, after removing some extreme outliers,** you can see that the price estimate for MODE is roughly in the $0.098 - $0.24 range, which is relatively more concentrated in the lower half of the range. **

Of course, the above price is only a static estimate based on the competitive situation of the track in which Mode Network is located, considering that there are certain differences in structural design, style focus and circulation status of major Layer 2 networks, the price performance of MODE still needs to wait for the opening before there is a definitive answer.