Cooperative /kəʊˈɒp.ər.ə.tɪv/ adjective An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled organization.

The Current State of Blockchain Ecosystems

There’s something you’ll hear time and time again in this space, “Community”. At Mode, we feel that this word is overused and has lost significant meaning.

The current form of community in the cryptosphere is a far cry from the communities that were built in this space prior to 2018. First-generation crypto communities were built around shared values and changing the global financial system. As much as the technology stack has progressed in the last five years, we have digressed in terms of community building.

A key thesis that emerged in 2016 was the “Fat Protocol Thesis”. This essentially highlighted the idea that most of the value accrual in a blockchain ecosystem accrues to the blockchain itself rather than the application layer, contrary to what is common in web2.

While the prediction wasn’t 100% perfect, we can see this in action today by comparing blockchain fees and total dapp fees in an ecosystem. The fees accrued to the chain are almost always higher than the sum of all dapps. According to DefiLlama, Ethereum monthly fees total approximately $119m, while the cumulative total of all dapps barely tops that at $128m. Opensea and AAVE, two of the largest fee generators at $16.1m and $7.8m respectively, earned around a tenth of the chain itself over the last month. This highlights why we see an overpopulation of chains and an underpopulation of successful dapps. Value accrual is too blockchain-centric and doesn’t fairly reward the community of builders and users who grow the ecosystem.

The second key trend/observation is that the crypto space in 2023 is very PvP (player vs player). Collaboration is at an all time low. With large capital outflows and the lack of new capital inflows, a cannibalistic mentality has swept across the industry, where the individual takes priority above all else. We are a far cry from the community-driven growth that brought us Ethereum as we know it today.

Cooperation

Research shows that working together collaboratively delivers better outcomes: sports teams, businesses, building civilizations, military, and crypto investment syndicates… cooperation in all of these environments delivers supermodular returns. But within most blockchain ecosystems (even if they are DAOs) cooperation is lacking. Why? Because reward mechanisms within crypto are not designed to reward collaboration but to reward domination and individualistic actions. Much of this has to do with the fact that non-cooperative game theory mechanics have been used far more as predictive tools for success in general economics across the world, enforcing the belief that ‘game theory’ is always zero-sum, where one person’s gain is another’s equivalent loss.

However, the study of cooperative game theory - the opposite approach, originally constructed by Von Neumann and Morgenstern, challenges this principle. It sheds light on how coalitions behave and demonstrates that collaboration often results in the highest joint payoff for everyone involved. The theory was later developed more widely through the work of Lloyd Shapley, and the development of the Shapley Value, often cited alongside the more well-known Nash Equilibrium. This work demonstrated the value of a cooperative and created the mathematical formula for calculating the fair distribution of payoffs to everyone involved in the cooperative based on their contribution.

At Mode we believe this concept holds the key to a truly successful token-based economy and sustainable community. It can help return the cryptosphere to a community of shared values, where the sum is far greater than its parts and the success of the protocol is driven by the continued success of its dapps and every member of the community.The Mode token economy has been modelled on this premise to encourage collaboration and reward activity from day one. Inbuilt onchain mechanics at the protocol layer such as sequencer fee sharing provides a pioneering approach to rewarding everybody’s contribution fairly and challenges the confrontational mentality currently sweeping the industry. **Mode brings people together to cooperate. To work towards a common goal, be part of something and get rewarded for their contribution.**When the protocol gets too fat it encourages laziness and greed. A protocol should be a lean growth machine and the ecosystem, full of builders and contributors, should be an abundant garden that bears the fruits of cooperation and collaboration. With the wonderful base Ethereum has given us, it is our job as Mode to further make Ethereum the underlying technology of web3. Mode is an Onchain Cooperative where, as we grow, you grow and Ethereum grows along with it. A symbiotic chain reaction. The Onchain Cooperative will give the ability for everyone to contribute. It will have no borders or exclusions. Every wallet is equal to every other wallet. Every wallet has an equal opportunity. In our Onchain Cooperative, contribution is the fuel. But not all contributions are created equally and over the coming weeks and months we’ll give clear instructions on how to have a meaningful impact on the future of Mode.

How to join the Onchain Cooperative

If Mode sounds like the kind of community you want to be a part of, there are a few simple steps to get involved:

1. Mint our “Mode Pledge NFT”

2. Share your membership on X/Twitter

3. Join our Discord Community

4. Follow Mode Network for the latest updates