Mode is an Ethereum Layer 2 (L2) solution built on the OP stack, part of the Optimism Superchain. It was designed to enhance Ethereum’s scalability, particularly in decentralized finance (DeFi). Mode’s mission is to develop open-source tools for the Superchain ecosystem, enabling native yield, smart treasuries, and on-chain AI agents.
Since launching on the mainnet in January 2024, Mode has rapidly expanded. With over $700 million bridged to Mode in just a few months, it is now focused on building an autonomous on-chain economy powered by its DeFAI stack.
Report Summary
This report will cover:
- The evolution of DeFi to DeFAI and its potential to lead future advancements.
- Mode’s DeFAI stack and its strategic positioning as the leading DeFAI chain.
- An overview of Mode’s current ecosystem and its standing among competitors.
- Upcoming developments in Mode aimed at scaling DeFi through on-chain agents and AI-powered financial applications.
Evolution from DeFi to DeFAI
Limitations of DeFi:
DeFi needs no introduction and has grown substantially in recent years, with over $120bn in Total Value Locked (TVL) across multiple ecosystems. However, it still faces several challenges that hinder its broader adoption:
- Complexity in Research & Portfolio Rebalancing: Identifying the best yield opportunities is difficult. Users often struggle to access actionable insights, which can lead to inefficient capital allocation.
- Risk of Fund Loss: Concerns over impermanent loss and other smart contract-related risks prevent deeper user engagement, particularly across decentralized exchanges (DEXs).
- Liquidity Fragmentation Across Chains: Liquidity is scattered across multiple chains, making cross-chain transactions cumbersome and inefficient.
- Poor User Experience & Accessibility: DeFi’s UX is still complex, creating friction for new users and limiting mainstream adoption.
Addressing these challenges is key to unlocking the next phase of DeFi growth, improving accessibility, efficiency, and security for all users.
The Rise of DeFAI
AI has been integrated into crypto through early projects like Bittensor, Akash, and Render – However, it gained significant momentum with the emergence of AI memecoins such as GOAT.
GOAT, a memecoin endorsed by AI chatbot Truth Terminal, sparked immense interest, leading to a market cap of $1bn achieved only in a few days. This fueled wider interest in AI, with projects like AIXBT and ai16z leading the shift from speculative AI memecoins to utility-driven AI applications.
The convergence of DeFi and AI, now termed DeFAI, is creating a new sector in the crypto space. Projects like Orbit, Griffain, and Mode are using AI to optimize decision-making in DeFi, enhancing strategies for yield farming, trading, and portfolio management.
DeFAI has quickly grown to a $2.11bn market cap, now commanding 53.26% of total market mindshare, surpassing memecoins.
Mindshare of Existing Narratives on CT – Source: Kaito
DeFAI Offerings and its Untapped Potential
Breakdown of Existing DeFAI Ecosystem:
The DeFAI ecosystem can be broadly categorized into four key areas, as originally classified by @poopmandefi:
- Abstraction AI / UX Layer: Front-end GPT can now execute tasks like buying/ selling tokens, yield farming and portfolio management based on natural language prompts. This abstraction enables DeFi to be more accessible and user friendly for all user types.
- Market Analysis & Prediction: AI agents like AIXBT consolidate insights from platforms like Twitter to predict market trends. These tools are still non-autonomous, but future AI agents may automate and execute strategies as well.
- AI Infrastructure & Platforms: Launchpads like Virtuals and ai16z provide the foundation for AI agents. A future DeFAI app store could enable specialized AI agents for various tasks like yield optimization or risk management.
- Yield Optimization & Investment Automation: Integration of AI in DeFi can automate investment strategies, allowing users to maximize returns with minimal intervention while optimizing risk management. This automation-first approach will also significantly enhance capital efficiency in DeFi.
The Untapped Potential of DeFAI:
The rise of DeFAI brings groundbreaking innovations that expand the possibilities of DeFi, addressing many of the challenges that have previously limited the sector’s growth.
While DeFAI is still in its early stages, with a market capitalization of $2.1bn, it has significant room for growth compared to the DeFi sector, which has a $128bn market cap.
As the sector matures and adoption increases, DeFAI has the potential to become a major pillar of the crypto economy, bridging the power of AI and DeFi.
Mode’s Introduction: The Full Stack DeFAI Chain
Introduction to Mode
Mode is an Ethereum Virtual Machine (EVM) Layer 2 solution built on the OP Stack. As part of the OP Superchain, Mode benefits from an ecosystem of interoperable blockchains. By utilizing optimistic rollups, Mode processes transactions off-chain before batching and settling them on Ethereum Layer 1. This approach ensures faster and more cost-efficient transactions while maintaining Ethereum’s security.
Since its mainnet launch in February 2024, Mode has achieved impressive milestones:
- 59+ million transactions
- 73 DeFi protocols deployed
- 400,000+ Users
- $400m TVL, ranking 3rd largest within the Superchain L2 stack
Building on its success, Mode is now focused on developing a full-stack DeFAI infrastructure to address the immediate and future needs of this emerging sector leveraging on its positioning as a L2 for DeFi.
Mode’s vision is to scale DeFi to billions of users through on-chain agents and AI-powered financial applications.
To support this, it has funded five projects through grants and supported nine teams in its AIFI Accelerator. Mode has also launched the Synth subnet on Bittensor and an AI Agent App Store, alongside a successful DeFAI hackathon.
By January 2025, Mode had deployed over 7,300+ AI agents and processed 12,800+ AI transactions. The growing demand for DeFAI positions Mode to lead the sector, continuously advancing its DeFAI stack toward a fully autonomous on-chain economy.
What is the Mode DeFAI Stack
Mode’s DeFAI Stack – Source: Mode
1. Interface Layer
Mode’s Interface Layer introduces two solutions: AI Terminal and AI Agent App Store. These solutions are set to redefine how users interact with DeFi by eliminating the need for multiple dApp frontends—allowing seamless execution of on-chain transactions, contract deployment, and asset management through AI-driven automation.
AI Terminal: The DeFi Copilot (Prelaunch for $MODE stakers in January 2025)
AI Terminal – Your DeFi Copilot – Source: Mode
The AI Terminal acts as a GPT-powered DeFi interface, enabling users to:
- Manage portfolios across multiple chains
- Deploy smart contracts and distribute tokens
- Launch NFTs and interact with on-chain assets
- Execute staking and yield farming strategies with AI assistance
What makes the AI Terminal unique is its integration with Synth, a synthetic data layer. This feature allows the terminal to answer probabilistic market questions with high accuracy, a capability no other LLM or AI agent currently offers.
Ultimately, the AI Terminal serves as a DeFi copilot, enabling users to interact with DeFi applications effortlessly, starting with Mode’s ecosystem and expanding to multichain integration in the future.
AI Agent App Store: Hub for Onchain AI Strategies
Mode’s AI Agent App Store – Source: Mode
The AI Agent App Store is a one-stop hub for users to outsource DeFi strategies to specialized AI agents. Since its launch in November 2024, the App Store has:
- 7349+ AI Agents deployed on Giza/Olas
- $332K+ Assets Under Agents
The AI Agent App Store acts as a coordination layer, providing users with easy access to prebuilt AI agents for specific DeFi tasks.
In the future, it will offer various frameworks and launchpads. New agents are expected to launch this year, focusing on automated governance, cross-chain strategies, and autonomous protocol deployment on Mode.
2. Data Layer
Both compute and data are equally important for AI agent development as they serve as a core cornerstone of AI development.
AI agents are only as smart as the data they are trained on. Many existing financial AI agents suffer from a lack of high-quality synthetic price data, making it difficult for them to generate accurate forecasts and perform probabilistic reasoning.
To address this, Mode created the Synth Subnet on Bittensor, where it sources synthetic price data to power AI agents and LLMs. This unlocks new DeFi use cases, including:
- LP range optimization for automated market makers
- Options pricing with probabilistic models
- AI-driven trading strategies based on multi-path simulations
Art? Yes this is the art of forecasting by Synth – Source: Mode
Mode specializes in generating a full distribution of possible price movements and probabilities, rather than just predicting a single outcome.
Workflow of Synth – Source: Mode
How it Works
Mode’s Synth Subnet generates accurate probabilistic forecasts by simulating multiple price paths. Unlike traditional models that predict a single price, Synth captures real-world market dynamics, including extreme movements and price fluctuations.
Using Continuous Ranked Probability Score (CRPS), the system evaluates the accuracy of predictions based on sharpness (how well the model predicts price ranges) and calibration (how closely predictions match actual market movements). This enables AI agents to make smarter, adaptive decisions.
With the recent mainnet launch Synth Subnet (SN50) on Bittensor, DeFAI agents on Mode can now gain access to real time probabilistic forecasting.
Power of Forecasting with Synth Subnet – Source: Mode
3. Infrastructure Layer
Mode’s Infrastructure Layer introduces additional upgrades to enhance security and interoperability within the ecosystem.
AI Secured Sequencer
Mode is developing an AI-secured sequencer, incorporating Forta Firewall technology to enhance the security of L2 transaction processing. Currently in testnet, this upgrade aims to prevent malicious transactions before they are executed.
Transaction flow with integration of Forta Firewall – Source: Forta
How It Works:
- Forta’s AI-powered firewall analyzes transactions in real-time, detecting potential risks before execution.
- Risky transactions are flagged, blocked, or timed out for review.
- Malicious activities are halted at the source, preventing exploits before they occur.
Key Benefits:
- High Detection Accuracy: Forta detects 99% of exploits with a false positive rate of <0.001%, all within 50 milliseconds.
- Enhanced Security for Builders & Users: Developers get built-in security for their applications, while users benefit from better asset protection against malicious transactions.
Superchain Interoperability:
As a key player in the Superchain, Mode gains access to a broad range of DeFi protocols. Assets can be bridged, and strategies can be executed across chains using Mode’s apps and interface. This simplifies cross-chain deployments while ensuring a common standard for interoperability.
Mode’s Ecosystem and Use Cases
Ecosystem Overview: Mode
Mode’s Ecosystem as at May 2024 – Source: Mode
Mode’s DeFi ecosystem is rapidly expanding, with over 250+ dApps already building on the network. Thanks to Superchain interoperability and increasing liquidity, Mode is well-positioned to thrive in the emerging DeFAI landscape.
The integration of AI-driven capabilities, such as probabilistic forecasting through Synth subnet, allows DeFi protocols standing to benefit significantly, fostering a seamless transition into DeFAI.
Though still in its early stages, Mode has already attracted over $332K in Assets under Agents—a number that has grown rapidly since the launch of the AI Agent App Store with a diverse set of Agents and Tooling available for use.
Mode’s AI Agent App Store – Source: Memento Research
Initiatives to Grow the Ecosystem
Mode is expanding its DeFAI landscape through initiatives like accelerator programs and hackathons, partnering with frameworks such as a16z, GOAT, and Olas to drive innovation.
1) Mode AIFi/DeFAI Accelerator:
To fuel DeFAI innovation, Mode launched its DeFAI accelerator program in October 2024, offering a $100,000 cash prize distributed among successful graduates.
Designed as an intensive two-month program, the accelerator aims to expand the DeFAI ecosystem within Mode, with quarterly cohorts eligible for a variety of incentives.
Participants gain access to a $10M early-stage fund through Mode’s angel and VC network, as well as Optimism auditing subsidies—without requiring token shares.
9 teams were selected to accelerate their development across key DeFAI verticals:
- AI Agent Infrastructure : Talus Network, Intentify
- Training Platforms for DeFi Agents : Almanak
- AI Asset Management : Amplifi
- Security Agents : QuillAI
- AI-Generated Front Ends : FortyTwo
- Verifiable AI Computation : Inference Labs, Aizel Network
- No-Code Model Training (Mobile) : Cerbo AI
2) Mode AI Agent Hackathon
The Mode AI Agent Hackathon (Sprint 1) ran from December 17–23, 2024, giving developers the chance to build AI agents on Mode using three approved frameworks:
- GOAT: Open-source framework equipping AI agents with on-chain tools.
- Eliza: Multi-agent simulation framework for deploying autonomous AI agents.
- Olas: A platform for creating AI agents with integrated tools and a skill marketplace.
The hackathon spanned 5 key themes: DeFi, BTCFi, Social, Gaming, and Wildcard, drawing 698 registrations in just 6 days.
Five standout projects emerged as winners:
- Midas: A chat-driven AI agent for complex DeFi tasks such as swapping, minting/burning LP positions, and managing liquidity.
- MoDAS: A multi-agent AI swarm for DeFi automation, allowing task delegation across specialized agents.
- Memex: AI-powered memecoin deployment, leveraging real-time trends for automated token creation.
- Mode Mind: An AI agent providing in-depth token analysis on Mode and sharing insights via X (Twitter).
- Research Idea Generator: AI-powered research discovery, NFT minting, and voice-controlled note management, integrating with Eliza for streamlined workflow.
With more hackathons planned, Mode continues to fuel DeFAI innovation.
Competitor Analysis
L2 and DeFAI Competitor Analysis – Source: Memento Research
When compared to other Layer 2 solutions like Base, Mode distinguishes itself through its dedicated DeFAI infrastructure, offering key capabilities on the protocol level such as an AI Agent App Store, front-end abstraction terminal, and core infrastructure.
This focus has enabled Mode to deploy 7,300+ AI agents via its App Store, surpassing Base’s 5,900+ AI agents.
While Base boasts a more diverse ecosystem ranging from launchpads to DeFAI, it lacks Mode’s targeted approach toward DeFAI at the L2 level. Additionally, Mode’s vision for an autonomous on-chain economy is taking shape with the launch of Synth Subnet, enabling models to forecast and make decisions autonomously by leveraging high-quality synthetic data.
Although Mode’s Assets Under Agent (AUA) currently stand at $0.332 million, there remains significant room for growth, particularly with an emphasis on integration and community expansion.
In comparison to DeFAI-specific protocols like Orbit, Anon, and Thales, Mode differentiates itself as a full-stack DeFAI L2 chain, offering the core infrastructure necessary for AI agents to seamlessly interact within its ecosystem.
Case Study: AI Agents in App Store
ARMA by Giza
ARMA Dashboard – Source: Arma
ARMA is an autonomous yield optimization agent designed to maximize returns on stablecoin deposits (USDT, USDC) across Mode’s lending protocols: Ionic, LayerBank, and Ironclad. It continuously evaluates lending rates and reallocates funds to the highest-yielding pools, minimizing transaction costs and ensuring optimal returns while keeping users in control.
Key Features:
- Self-Custodial Smart Accounts: Users retain control over funds through account abstraction technology.
- Auto-Rebalancing: ARMA dynamically shifts assets to the most profitable lending pools.
- Auto-Compounding: ARMA reinvests earnings to maximize yield over time.
ARMA has accumulated over $300K in Assets Under Agent (AUA), with 7,400+ agents and 20,000+ autonomous transactions, achieving an APR of 9.69%.
Overview of ARMA – Source: Giza
Amplifi
Amplifi, a member of Mode’s AI Accelerator Program, offers AI-driven yield strategies for BTC and stablecoins. Through one-click vaults, it simplifies DeFi by eliminating gas fees, swaps, and bridging, making it more accessible and efficient. Amplifi leverages omnichain liquidity for optimal returns while maintaining full asset custody, and its AI engine dynamically reallocates funds across liquidity pools to prevent yield decay..
Example of BTC Strategy through Amplifi – Source: Amplifi
Key Features
- Dynamic Asset Management: Automatically optimizes assets into the highest APY pools for BTC and stablecoin strategies.
- Seamless Cross-Chain Functionality: Leverages Polyhedra’s zkBridge for cross-chain strategy optimization, eliminating manual bridging and gas fees.
- Account Abstraction: Gasless transactions and Web2 social logins for a smooth user experience.
- Stable APY Management: AI-driven mechanisms ensure consistent returns by preventing yield decay.
Amplifi is presently in closed beta and is scheduled to enter open beta in Q1 2025. Further integrations with Superchain (BOB and Base), Cardano, Bitlayer, and SVM/Move are planned, with the full v1 release expected to go live by Q4 2025.
Modius by Autonolas
BabyDegen Overview – Source: Olas
BabyDegen, an autonomous portfolio manager developed by Autonolas, trades on Mode using AI models and real-time market data. By integrating external data sources like CoinGecko, BabyDegen analyzes price trends and selects the best trading strategies autonomously, making real-time buy, sell, or hold decisions.
Key Features:
- Personalized Portfolio Management: Adaptive trading strategies based on market conditions.
- Protocol & Asset Support: Supports USDC and ETH on Balancer and Sturdy.
- Fully Autonomous & Locally Owned: Operates independently, ensuring user control.
The alpha version is available for developers on GitHub, and a consumer-friendly version is planned for release soon.
$MODE: Season Breakdown and Token Economy
Token Allocation
Tokenomics Breakdown – Source: Mode
Launched in May 2024 with an initial supply of 1.3 billion tokens, 35% of the total supply is allocated to users and developers to fuel ecosystem growth. The distribution to date:
- Season 1: 5.5% of total supply
- Season 2: 5% of total supply
- Season 3: Marks the end of the points season, with a focus on veMODE
- Remaining Allocation: 24.5% of total supply
Core Contributors (19%) and Investors (19%) are subject to:
- 12-month cliff from TGE (Token Generation Event)
- 24-month linear vesting schedule
27% is allocated to the Foundation and On-Chain Treasury, which funds ecosystem initiatives and provides user incentives for applications.
Vesting Schedule – Source:Mode
MODE: Season 1 – 3
Mode is currently in Season 4, following three previous seasons, each with distinct objectives and goals:
- Season 1 (Ended May 2024): 5.5% of the total $MODE supply was airdropped to early participants.
- Season 2 (May – Oct 2024): 5% of $MODE and 1,000,000 $OP tokens were distributed through incentive campaigns.
- Season 3 (Oct 2024 – Jan 2025): Introduced the veMODE and veBPT tokens, modeled after Curve Finance’s vote-escrow system, enabling governance and decentralized incentive distribution.
Season 3 veToken Model – Source: Mode
Season 3: Introduction of the veToken Model
Season 3 introduced veMODE and veBPT, tokens that enable governance and incentive distribution through staking.
- veMODE is obtained by staking $MODE tokens, with voting power increasing over time.
- veBPT is obtained by staking an 80/20 MODE/ETH LP token on Balancer, with similar voting power dynamics.
Incentives are distributed in a 10:1 ratio between veMODE and veBPT. Both token holders are eligible to claim OP rewards based on the amount staked and voting participation. Unstaking triggers a 3-6 day cooldown, during which accumulated voting power and rewards are lost.
Voting occurs every two weeks over six epochs, with users voting on protocols competing for a share of community incentives. The more votes a protocol receives, the larger its reward share.
Incentives initially funded by OP grants will transition to $MODE-funded airdrops. In the future, an Olympus-like smart treasury will sustain the protocol and fund incentives for veToken holders.
Mode: Season 4 (Currently Live)
Launched on January 20, 2025, Season 4 introduces the Bribe Marketplace and Agentic Staking/Voting in governance, strengthening the alignment between protocols and voters through bribes.
In Season 3, bribes were offered as isolated airdrops. Season 4 integrates with Hidden Hand, creating a centralized marketplace where protocols can deposit bribes with specific payout conditions, and voters can track and claim them. This makes it easier for voters to support their preferred protocols.
$OP remains the primary incentive, focused on tangible on-chain use cases like yield and liquidity incentives. Bribes provide additional engagement by rewarding voters who influence governance decisions.
Season 4 also allows AI agent applications to stake and vote using Crossmint’s GOAT framework, enabling new AI-driven governance opportunities. This was made possible through Mode’s recent AI Agent hackathon.
Utility of $MODE:
$MODE serves multiple purposes, with the primary utility being staking to join the veMODE club. By staking, token holders unlock the following benefits:
- Whitelisting for AI Agent launches on launchpad releases on Mode.
- Fundraising for AI Agent launches is conducted in $MODE.
- Liquidity pools for AI Agent launches paired exclusively with $MODE on Velodrome.
- Access to governance for grants and incentive allocation.
- Governance voting and participation in the Bribe Marketplace to earn incentives ($OP initially, transitioning to an on-chain treasury), contributing to active alignment between users and protocols.
- Early access to DeFAI tooling, such as Mode AI Terminal.
- Eligibility for AI Agent airdrops.
These utilities help limit token emissions and inflation, as incentives are initially funded by $OP. The introduction of veToken governance also creates token sinks, increasing value for long-term holders through lockups while fostering an active and vibrant DeFAI ecosystem.
Flywheel of Adoption for $MODE:
Season 4, along with a full-stack DeFAI infrastructure and growing AI Agent launches, is driving a powerful adoption flywheel:
- Users acquire and stake $MODE to access veMODE.
- Staking grants whitelist access to AI Agent Launchpads (e.g., Chirper, DAAO, Arcaid)
- Fundraising for AI Agents on launchpads is conducted in $MODE.
- Liquidity pools for new AI Agent launches are paired with $MODE on Velodrome.
- High-quality AI Agent launches increase demand for $MODE, driving more staking.
This flywheel accelerates the growth of the Mode ecosystem. To sustain this momentum, attracting high-quality AI Agents developed with Mode’s infrastructure is key to fostering widespread adoption and a thriving DeFAI ecosystem.
Impact of veToken Model
As of January 2025, approximately 432 million $MODE tokens are staked, representing 17.28% of the circulating supply. Since the launch of veMODE in October 2024, the vote-escrow model has acted as an additional token sink, creating supply shock and positively impacting $MODE’s price.
Price of $MODE over time – Source: DefiLlama
Given that veMODE has only been live for three months, there are still significant incentives for staking, particularly with upcoming launches focusing on building an autonomous on-chain economy. As more high-quality projects launch on MODE, the adoption flywheel will gain momentum.
Additionally, Total Value Locked (TVL) in Mode has grown steadily, and on-chain activity has seen a positive shift, with daily transactions increasing since the introduction of veToken governance.
Reversal in Daily Transactions on Mode – Source: sealaunch_team (Dune)
Road Ahead for MODE
In 2024, Mode focused heavily on building a DeFi ecosystem for yield-bearing assets, integrating with over 70+ DeFi protocols and bridging more than $700 million to Mode in just a few months.
In 2025, Mode will further strengthen its DeFi ecosystem with major launches aimed at solidifying its position as the full-stack DeFAI chain. Key areas of focus include:
- AI Terminal – Expanding accessibility and automation for DeFi users.
- Data Layer via Synth Subnet – Enhancing forecasting and on-chain decision-making.
- Infrastructure Layer – Strengthening AI-powered security and Superchain interoperability.
The recent launch of Synth Subnet marks a significant milestone, enabling the sourcing of powerful synthetic price data. This allows Agents and LLMs to enhance forecast accuracy and offer probabilistic reasoning, unlocking new probabilistic DeFi models and advancing the vision of an autonomous on-chain economy.
Additionally, Mode is expanding its ecosystem through partnerships with AI-focused launchpads like Chirper AI, simplifying the launch of Level 3 DeFAI agents.
To further accelerate DeFAI innovation, Mode has introduced new initiatives in 2025, including the AI Agent Founder School, designed to streamline the development and deployment of AI Agents on Mode.
Final Thoughts
The emergence of DeFAI is fundamentally reshaping the landscape of DeFi, driving innovation and unlocking new synergies between AI and decentralized finance. As the space continues to evolve, we are witnessing an accelerated push toward autonomous and intelligent financial systems.
It is not difficult to envision a future where:
- Total Value Locked (TVL) transitions into Assets Under Agents (AUA).
- Vaults evolve into Agentic Strategies, optimizing yield dynamically.
- Traditional DeFi frontends are replaced by LLM-powered chat interfaces, offering a more intuitive and automated user experience.
The transition into DeFAI – Source: Memento Research
The impact of AI-driven interactions is already evident—users who grew up in the Google era are increasingly shifting from traditional search queries to engaging with ChatGPT for answers.
2025 is set to be the year of utility-driven AI agents—autonomous entities capable of trading, providing liquidity, borrowing, and lending on behalf of users. Mode seems to be well-positioned for this autonomous on-chain agent economy, thanks to its full-stack infrastructure, ecosystem initiatives, and continued focus on simplifying AI Agent development.
Authors: @zkayAPE, Memento Research
This report was written in partnership with Mode. This report has been prepared for informational purposes only. It does not constitute investment advice, financial advice, trading advice, or any other sort of advice, and you should not treat any of the report’s content as such.