Mode became the first L2 to introduce vote depository (ve) and indicator-based governance to its ecosystem, modernizing a long-standing governance model implemented by successful DeFi protocols. In season 3, the Governance games incentivized community members to stake tokens to increase voting power, directing rewards to protocols through meters. The results are exciting:
- 43% of wagered circulating supply
- 7.6K+ unique voters participated
- 31K+ votes cast through meters
This is how Mode They addressed persistent challenges in L2 governance to achieve high participation rates:
Token-based delegate voting, a common on-chain governance model for L2s, faces significant challenges:
- Misaligned incentives: Delegates often lead governance decisions, but may not have enough “skin in the game,” creating potential conflicts with builders and token holders.
- Coordination overheads: Meeting quorum and approval thresholds requires frequent and time-consuming votes among numerous proposals.
- Low participation: Voter fatigue leads most token holders and many delegates to disengage, leading to low participation rates, failed proposals, and lack of accountability.
These problems reduce the effectiveness of governance decisions and discourage broad community participation, undermining alignment among stakeholders.
To address the challenges of traditional on-chain governance, Mode introduced a Modernized governance model based on indicators.—Inspired by DeFi governance, lessons from past seasons, and working alongside experts from Aragon. Rockerand Aura.
At the center of this model: community members stake tokens to gain voting power (represented as veTokens), which can map to indicators. Flags determine how rewards are distributed among network protocols. This design eliminates the need for continuous voting while giving voters the flexibility to reallocate their power each epoch.
Embedded mode implementation. unique features adapt the governance model to the needs of your community:
- Flexible Voting with Linear Curve: Voting power increases linearly the longer the tokens are staked. However, there are no mandatory locks: token holders can stake or unstake at any time, subject to warm-up and cool-down periods.
- Double Token Bet: Both MODE and BPT (Balancer’s MODE-ETH 80/20 pool tokens) can be staked. This unlocks dual governance incentives, enabling dynamic voting power for multiple stakeholder groups.
- Protocol-focused rewards: Instead of directing rewards to liquidity pools, participants assign voting power to protocols through indicators, incentivizing ecosystem growth.
- Governance Center: A streamlined hub where community members can stake, vote, and claim rewards simplifies the governance process for all participants.
Incentives for both veMODE and protocols adapt from season to season, keeping governance responsive and adaptable to ecosystem and market dynamics.
Mode built its governance on Aragon OSxa modular DAO framework that enables secure and customizable governance solutions.
see contract library
To simplify complex five-governance implementations, the Aragon team created a modularized five-contract library, allowing Mode to customize key parameters efficiently and securely, without requiring resources from its development team.
The architecture includes a central contract that acts as a controller, managing the main opt-in and un-stake logic while connecting to subcontracts that handle specific components:
- NFT logic: Each bet is represented as an NFT.
- Curve logic: Manage linear or dynamic escrow logic in Solidity.
- Clock logic: Defines epochs, checkpoints and synchronization mechanisms.
- Queue logic: Monitors output queues and conditions.
- Voting logic: Connect five tokens to governance mechanisms.
Indicator Governance Plugin
Mode used Aragon OSx plugin architecture to implement your gauge-based governance system. The plugin allows veToken holders to allocate their voting power to a predetermined list of indicators, setting a percentage of their voting power to direct rewards to the protocols. Once voting power is assigned, there is no need for repetitive votes: holders simply reassign it as needed at the beginning of each epoch.
The modularity of Aragon OSx allows Mode to adapt to what has been learned. Plugins can be installed, updated or removed as the community and ecosystem evolve. This flexibility is fundamental to Mode’s seasonal management, where learning from one season shapes the next.
Aragon OSx powers governance innovation with a modular and secure framework. By modularizing five contracts, Aragon makes it easier for projects to customize governance models to fit their ecosystems and communities.
Do you want to implement a customized ve model for your project? Get in touch here.
