Airdrop claims are about to open, what is the valuation of Mode Network token MODE?

24-05-07 14:11

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Original title: "Airdrop claims are about to open, a quick look at Mode Network (MODE) valuation expectations"

Original author: Azuma, Odaily Planet Daily

During the May Day holiday, Mode Network, a Layer 2 network built on OP Stack, announced that it will launch the governance token MODE on May 7 and will officially open the first quarter of airdrop claims at 11:00 UTC on the same day (19:00 Beijing time). The claim homepage (Claim.mode.network) is now open, but the specific airdrop allocation amount cannot be seen for the time being.

Mode Network Basic Information Overview

From the perspective of positioning, Mode Network is a modular Layer 2 network focusing on DeFi services. The network is built on OP Stack and has built the Layer 3 network Mode Flare by integrating Celestia's DA solution.

Unlike other Layer 2s, the biggest feature of Mode Network is that it has a shared incentive mechanism for contract revenue built into the protocol layer. By sharing part of the profits from the sorter's revenue, Dapps and users have the economic motivation to work together.

According to L2BEAT data, Mode Network's current total locked value (TVL) is about US$603 million, ranking 10th among all Layer 2s, and is only about US$200 million away from the more well-known Layer 2s such as zkSync Era and Linea.

In terms of ecological landscape, Mode Network officials have 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 its positioning, the application types on Mode Network are also mainly DeFi 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 and a total of approximately 20 million transactions.

MODE Token Economic Model

In terms of utility, MODE will play two roles on Mode Network: one is to serve as a governance token to determine the future development direction of the network, 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 circulation supply will be 1.3 billion, with part of the circulation share coming from the first quarter airdrop rewards and part from the foundation and on-chain treasury. In terms of distribution mechanism, the distribution details of MODE are as follows:

· 35% of MODE will be used for airdrops to users and developers, of which 5.5% will be allocated for airdrops in the first quarter and 5% will be allocated for airdrops in the second quarter. The remaining tokens will be gradually distributed in future airdrop rounds;

· 19% of MODE will be allocated to investors, which will be locked for 12 months and then released linearly within 24 months;

· 19% of MODE will be allocated to early contributors, which will also be locked for 12 months and then released linearly within 24 months;

· 27% of MODE will belong to the foundation and the on-chain treasury for ecological development incentives.

It is worth mentioning that Mode Network has officially explained the operating mechanism of the foundation and the on-chain treasury. The foundation tokens are mainly responsible for funding ecological projects, and the use of on-chain treasury tokens needs to be decided through community governance, and then connected to major applications in the form of incentives. This also means that in the early stage of MODE TGE, there may be less than 550 million first-quarter airdrop shares (some airdrops will also be locked, which will be discussed in detail below) out of the 1.3 billion circulating shares in an absolutely tradable state.

Brief Analysis of the Airdrop Mechanism

Like many current projects, Mode Network also uses a points mechanism to measure community contributions. Users can accumulate points by bridging assets to the network and using various applications. The amount of points will affect the final airdrop share.

On May 5, Mode Network ended the first season of airdrops. Users who had used the network and accumulated points before that (need to reach a certain unannounced minimum threshold) had the opportunity to obtain projects. However, Mode Network also mentioned that the snapshot will be taken before May 7. If users withdraw funds before then, their airdrop shares may change.

In addition, in order to limit the potential selling pressure from large users, Mode Network will set certain airdrop lock-up restrictions for the top 2,000 addresses in terms of points - 50% can be claimed when the airdrop starts, and another 50% can be claimed after 90 days. During this period, users must keep their assets on Mode Network, otherwise they will be fined in proportion, and the fined tokens will flow to the second season of airdrops.

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

After the first season event, Mode Network immediately launched the second season airdrop event. The second season event will last from May 5 to September 6, and a total of 5% of the token share will be allocated. Users of the first season event will receive a certain amount of points acceleration in the second season event.

MODE Valuation Expectations

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

Whale Markets data shows that the current OTC transaction price of MODE on the platform is $0.11, the corresponding initial circulation market value (MC) is $143 million, and the corresponding full circulation valuation (FDV) is $1.1 billion.

Previously, since the valuation model of Layer 2 itself is relatively clear, we can also perform a weighted calculation of TVL and combine the MC and FDV status of existing Layer 2 projects for valuation.

As shown in the above figure, after removing some extreme outliers, we can see that the price estimate for MODE roughly falls in the range of 0.098 - 0.24 USD, 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 the major Layer 2 networks have certain differences in structural design, style emphasis, and circulation status, the price performance of MODE still needs to wait for the opening of the market to have a definite answer.