How Mode Network is the Ultimate Breeding Ground for the Cross Section of Crypto and AI | Explained

This episode explores Mode Network, an Ethereum Layer-2 (L2) solution built on the OP Stack, aiming to scale DeFi to billions through on-chain agents and AI-powered financial applications.

Mode Network: Scaling DeFi with AI

The podcast introduces Mode Network, positioning it at the intersection of DeFi (Decentralized Finance) and AI, or "DeFi AI." The primary goal of Mode is to become the leading DeFi AI chain within the Optimism superchain ecosystem, and potentially more broadly. The hosts highlight Mode's strategy, which involves attracting top builders, leveraging innovative tokenomics, and offering exposure through its Agent app store.

The DeFi Accessibility Problem

The hosts discuss the core problem Mode aims to solve: the complexity and inaccessibility of DeFi for the average user. They point out that while DeFi offers superior benefits compared to traditional finance (TraFi)—such as instant accessibility, speed, and fund sovereignty—its complexity has hindered widespread adoption. "DeFi is just better than TraFi if you want instant accessibility to your funds, if you want that speed of movement of funds, and even more importantly, sovereignty of your funds." The hosts use the example of Celsius, a centralized lending platform that amassed $25 billion in total value locked (TVL) before its collapse, to illustrate the consumer appetite for DeFi yields, coupled with a lack of understanding of the risks.

AI as the Solution: The DeFi-AI Intersection

The podcast presents AI as a crucial component in solving DeFi's accessibility problem. The hosts envision AI agents monitoring, dynamically adjusting, and automating DeFi tasks, making high-yield opportunities accessible to a broader audience, including those unfamiliar with the intricacies of DeFi. They emphasize that Mode Network was conceptualizing this intersection as "Aii" back in September 2024, before the term "DeAI" gained popularity.

Benefits of the DeFi-AI Intersection

• Automated Transactions: AI agents can execute transactions without centralized intermediaries, maintaining user control over funds.
• Smart Agents: Agents can learn and improve over time, using historical market data to optimize strategies.
• Position Management: Agents can dynamically adjust positions, manage leverage, and mitigate impermanent loss in liquidity provision.
• 24/7 Operation: Agents can operate continuously without breaks.
• Auditability: On-chain transactions provide a transparent and verifiable audit trail.

The hosts mention examples of applications being built on Mode, such as yield optimizers and blockchain security agents.

Mode Network's Infrastructure and User Experience

The podcast delves into Mode Network's infrastructure, highlighting its focus on simplifying the user journey. Key features include:

• Clean Interface: A user-friendly dashboard and terminal for interacting with DeFi applications and AI agents.
• Partnerships: Collaborations with DeFi protocols like Velodrome and Aave.
• Incentives: Rewards for dApps and users through innovative tokenomics.
• Data Layer: The BitTensor subnet (Synth Subnet 50) provides high-quality data for AI agents.
• Execution Environment: An AI-secured sequencer, partnered with Forta, uses AI to detect anomalies and prevent harmful transactions.
• Builder Support: Mode offers marketing, liquidity, testing, and user base access to attract developers.

Mode's Dashboard, Agent App Store, and Terminal

The hosts describe Mode's user-facing features:

• Dashboard: Simplifies navigation and provides access to live dApps, governance features, the AI agent app store, and a bridge.
• AI Agent App Store: A platform for discovering and interacting with live AI agents on Mode Network.
• Mode Terminal: A DeFi terminal that allows users to perform tasks using natural language, simplifying DeFi transactions. "With the mode terminal, what you can do is simplify your DeFi transactions and say you want to do maybe a swap or a borrow, you can come in here and use natural language."

Synth Subnet 50: The Data Layer

The podcast explains Synth Subnet 50, Mode's data solution powered by BitTensor. This subnet provides forecasting data for AI agents, enabling them to make accurate predictions for tasks like liquidity provision. The subnet incentivizes miners to generate simulated price paths for Bitcoin, creating volatility predictions that help AI models forecast price movements. The hosts emphasize the potential of this data layer to become a "moat" for Mode, attracting AI agent builders.

Spotlight on Teams Building on Mode

The hosts showcase three teams building on Mode:

• Armor by Giza: Manages stablecoin yields by automatically moving funds to the best-performing opportunities.
• Modius (by Autonolas): A trading agent and portfolio manager that uses strategies and algorithms to generate returns.
• Amplify: Aims to create yield-bearing Bitcoin strategies, simplifying access to Bitcoin liquidity for DeFi AI.

James Ross: The Founder's Vision

The podcast briefly profiles James Ross, the founder of Mode Network. His background includes building a fintech startup focused on automated savings, and experience as the managing director of Hype, a blockchain marketing agency. The hosts highlight his experience in DeFi and his understanding of scaling and collaboration.

Mode's VE Tokenomics

The hosts explain Mode's vote-escrow (ve) tokenomics model. Users stake Mode tokens or Balancer BPT tokens (80% Mode, 20% WETH) to gain voting power, directing OP incentives to dApps. The longer users stake, the greater their voting power (up to 6x). The current rewards for stakers are around 22% APY. The veModel also includes "Agent Mode Memberships," which offer tiered access and benefits based on the number of tokens staked.

Bribes and Agentic Staking

The hosts discuss the introduction of bribes in Season 4 of Mode governance. Bribes are emissions of tokens from dApps to incentivize users to vote for them, creating a win-win scenario. Mode has integrated with Redacted's Hidden Hand for streamlined bribe management. They also highlight the introduction of agentic staking and voting, allowing AI agents with veMode to participate in governance. "They've integrated with the guys at Redacted via Hidden Hand which is just a great product in terms of bribes and distributions."

GOAT SDK and Open Source Tech

The podcast mentions the Great Onchain Agentic Toolkit (GOAT SDK), launched in collaboration with a16z. This SDK enables the deployment of governance agents on Mode and integrates with Eliza OS, providing builders with tools for Twitter integrations, trading integrations, and more.

Roadmap and Future Developments

The hosts outline Mode's roadmap, including:

• AI Vaults: An AI-powered treasury manager for individuals and organizations.
• Mobile App: A DeFi AI ecosystem app for iOS.
• Mode Accelerator: A program to incubate and accelerate projects building on Mode.
• Optimism Superchain Upgrade: An upgrade to the OP Stack for improved cross-chain interoperability.

Final Thoughts and Strategic Implications

The hosts conclude by emphasizing Mode's impressive build-out, foresight in the DeFi-AI intersection, and user-friendly experience. They highlight the potential of the Synth subnet and the overall synergy between DeFi and AI for user adoption. The hosts express bullish sentiment for Mode's future, particularly within the Optimism superchain.

Reflective and Strategic Conclusion

Mode Network's strategic positioning at the DeFi-AI nexus, combined with its user-centric design and robust data infrastructure, presents a compelling opportunity for Crypto AI investors. The platform's innovative tokenomics, focus on builder support, and upcoming developments suggest significant growth potential, making it a key project to monitor in the evolving landscape of decentralized finance and artificial intelligence.