Background:
BIP-589 signaled that the DAO would like the Balancer protocol deployed on Mode. As a result, a deal was struck between Balancer OpCo and the Mode Foundation for an incentives budget. It was decided not to launch veBAL on Mode due to the lack of capacity in incentive markets, and no clear parties interested in buying into veBAL or vlAURA. Instead it was mutually decided that it would be better to leave some space to try something new.
After speaking with the Mode team and realizing they were considering alternative incentive strategies other than their initial direct incentives and points-based programs, we collectively came to a realization that Mode governance itself could be an 80/20, where voters directed the chain-wide incentives budget between DAOs. This quickly became a workstream where a number of contributors from organizations including Balancer, Mode, Aragon, Hiddenhand, and Aerodrome all came together to ponder what such a meta-game could look like.
Mode Season 3 (veMODE) is about ready to go. This will be a multi-month experiment in VE tokenomics. An experiment that Balancer Contributors have helped architect, and one in which Balancer DAO will compete for incentives, TVL and relevance. It also presents a unique opportunity and case study for how Balancer can be an integral part of a chain-wide incentive and liquidity strategy.
Note that up until now, Balancer has elected not to use its $MODE incentives for direct incentives knowing that we would soon be able to stake these tokens for a steady flow by participating in the new veMODE system.
A number of things remain ungoverned, including exactly how the $MODE currently sitting in the LM multisig should be handled, and what should be done with fees on MODE given the usual core pools system can not be implemented due to a lack of veBAL. As the first actions for MODE Season 3 may be relevant in the next few weeks, this BIP seeks to provide some clarity on how the $MODE granted to Balancer by the Mode Foundation and currently sitting in the LM Multisig on Mode will be handled. Governance around fees is due soon, but becomes more relevant as significant fees start to accumulate and need to be swept.
Summary:
In coordination with the Mode team, the Balancer DAO was provided with a MODE allocation which Balancer DAO plans to utilize in veMODE’s upcoming season 3 tokenomic event. Balancer was selected as a liquidity host for staking the 80MODE/20ETH BPT, which speaks to the successful propagation of the ve8020 model. MODE will also feature a $MODE single staking option to give users flexibility in their token utility options.
The purpose of this proposal is to grant the Balancer Maxis the permission from the DAO to act on the DAO’s behalf by optimizing allocations between the 80MODE/20ETH and single staking options they will offer, as well as distributing the rewards to Balancer pools at the Maxi’s discretion. Stakers will be able to vote for their DAO of choice to receive OP and MODE allocations which must be leveraged for ecosystem growth on the network. Staking allocation and distribution optimization plans will be shared at a later time, but in order for Balancer to be involved as early as possible in Mode’s ecosystem this BIP allows the Balancer Maxis to place the Mode into the corresponding staking contracts.
Currently, Merkl is the preferred method of distribution of OP and MODE incentives accrued in the greater MODE and Superchain ecosystem. This is what we plan to leverage as opposed to rewards injectors on Balancer gauge contracts.
Motivation:
By staking the MODE allocated to the LM Multisig Mode: 0x9ff471F9f98F42E5151C7855fD1b5aa906b1AF7e Balancer can participate in in MODE’s season 2 incentivization package. In doing so all MODE or OP earned by Balancer via this staking mechanism is to be redirected to LPs on Balancer. This will help to bootstrap the network and grow Balancer’s influence, TVL, and revenue streams on the new network deployment. By granting the overarching permission to allocate these incentives accordingly, the Maxi and BD SPs can work with the minimal amount of friction to ensure Balancer benefits as much as possible utilizing the MODE allocation as a utility.
Related Links & Contracts:
Mode Staking Documents: Staking | Mode Docs
80MODE/20wETH Pool: Liquidity Pool (v2): Balancer 80MODE/20wETH
80MODE/wETH Locking contract pending deployment by Mode team.
MODE Token: 0xDfc7C877a950e49D2610114102175A06C2e3167a
MODE Staking Contract: 0x74B847b308BD89Ef15639E6e4a2544E4b8b8C6B4
Technical Specification:
At this time no specific technical specification can be given due to the abundance of dynamic components related to staking, pool joins, voting, potential delegation, and variable utilization of merkel distributions for the MODE and OP incentives accrued. The Maxis will however further outline the strategy around distribution and staking as it occurs.