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Since Vitalik outlined a new direction for Ethereum’s scaling roadmap by introducing layer-2 (L2) solutions, over a hundred networks have emerged, each seeking to claim a portion of the activity and total value locked (TVL).
However, it has become quite evident that the general-purpose L2 landscape has primarily consolidated around a few dominant players: Arbitrum, Optimism, and Brian Armstrong’s fed chain, Base.
Going forward, if a general-purpose L2 does not offer significantly greater scalability or improved user experience, the value proposition for such a network is, to put it mildly, weak.
Therefore, I think the next step for Ethereum’s scalability lies in utilizing app-specific blockchains designed for specific niches or use cases. Was Cosmos right all along?
And if there's a use case hotter than a car’s leather seat in summer, it’s AI. When it comes to AI, Mode, initially a general-purpose L2, redirected its focus last fall towards becoming AI-driven. It has been at the forefront of this narrative ever since.
Mode, an AI-focused L2
At blocmates, we have explored Mode in detail, initially dissecting the mechanics of the chain in our primer article and subsequently highlighting the crucial function that the synthetic data layer Mode developed serves in DeFi.
To recap, Mode is an Ethereum L2 built on Optimism’s Superchain, focusing on AI-powered DeFi.
More specifically, Mode offers a variety of tools to help developers better integrate AI into their apps, such as Synth, the Bittensor subnet, AI-specific APIs, and support for leading agent toolkits like ElizaOS and GOAT.
Since our last look at Mode in early March, developers have been working on something significant behind the scenes.
Last week, Mode unveiled its biggest update yet—an AI-powered perpetual trading DEX featuring:
- Over 100 trading pairs with up to 50x leverage.
- An AI terminal for text-based trading commands.
- Integration of predictive data from Synth for smarter trading decisions.
Let’s unpack it, shall we?
The trifecta of AI-powered trading
As a semi-active trader, I begrudgingly admit that my losses outweigh my profits. To cope, I remind myself that over 90% of traders are in the same boat.
I’ve been thinking about how to join the small group that consistently earns profits, and then it clicked.
It’s not that I can’t jot down a few lines on a chart and practice horoscope for men based on the information available to me revolving around events like lunar cycles and Jerome Powell’s speeches.
The issue is that our information and tooling are significantly inferior to that available to the big dogs.
I can’t even fathom the number of sophisticated tools that the professionals on Wall Street possess.
No wonder my long positions get constantly fished. For this reason, I’m particularly excited about what the mad scientists over at Mode have cooked up in their lab.
The latest release, Mode Trade, seeks to bridge the information and tool gap that we retail traders consistently face.
Mode Trade
Mode Trade is a purpose-built perpetual trading platform that offers over 100 trading pairs from the outset, some of which can be leveraged up to 50x.
Powered by Orderly’s CLOB, traders benefit from instant execution, MEV protection, and on-chain settlement.
Unlike most perp DEXes out there, Mode’s solution features:
- Gasless trading: No gas fees once you deposit the funds.
- One-click trading: At the start of each session, a new trading key pair is created, and no further signatures or approvals are required to perform any action.
Essentially, achieving CEX-like speeds and user experience while maintaining self-custody.
In the future, the team intends to provide support for various tokenized stocks as well. Considering the recent SEC’s comments regarding this sector, this might turn out to be a hot narrative in the near future.
So far, you might think, "Okay, another perp DEX. Why should I care?" But remember, Mode is an AI-focused L2, and they have delivered on AI-focused features.
AI Terminal
While the AI terminal has been live for some time now, its functionality was previously limited to simple on-chain actions.
With Mode Trade now operational, the Terminal plays a pivotal role in assisting new traders with portfolio management, trading, and overall risk management.
In combination with the perp DEX, Mode currently allows users to perform the following actions:
- Execute on-chain actions like swapping and staking.
- Access predictive insights through integrated Synth forecasts.
- Open, adjust, monitor, and close positions via clear, straightforward commands.
Although Mode’s AI Terminal won’t instantly transform you into an elite trader, having access to a tool that provides predictive synthetic data and broad trading insights right at your fingertips can significantly enhance your trading experience.
I believe it serves as an excellent entry point for newcomers learning the fundamentals of trading while also catering to seasoned traders seeking an advantage with synthetic data.
Synth: Decentralized synthetic data
First let’s address the elephant in the room: What even is synthetic data?
Synthetic data is artificially generated data that mimics real-world data without being collected from actual events or observations.
It’s created using algorithms, simulations, or statistical models and is designed to reflect the characteristics, patterns, and relationships found in real data.
In our context, Mode’s Bittensor subnet, Synth, was created specifically to forecast future price changes.
TL;DR: Bittensor's decentralized incentive framework rewards miners whose data accurately mirrors real-world results.
This competitive environment promotes the ongoing enhancement of synthetic data, thereby improving AI models’ capability to predict and respond to ever-changing financial markets.
Thanks to the integration of Synth into the AI Terminal, users gain instant access to possibly the most accurate price prediction data available in crypto, which allows users to:
- Improve risk management through accurate market predictions.
- Enhance trading strategies across Mode Trade.
- Benefit from a transparent, competitive model evaluation and continuous data refinement.
Currently, the AI terminal—and, by extension, Synth's predictive capabilities—are available to stakers holding at least 400,000 veMODE.
Concluding thoughts
Weeks in crypto can feel like years, but let’s not forget that this industry is still in its infancy, and the pace of innovation is only accelerating, especially now that AI has entered the chat.
The collision of crypto and AI has cranked the tempo up to a borderline absurd level, and protocols like Mode, built at the intersection of these two century-defining technologies, stand to benefit the most.
Sure, most crypto x AI projects—including Mode—are still in their early innings, with much of the space in proof-of-concept territory.
However, the direction of travel is clear, and the upside is hard to ignore. Just last fall, we were all busy flipping X reply bots as if they were the future of France.
Fast-forward a few months, and we’re now talking about AI algorithms using synthetic data to predict prices and teach us how to trade in real time.
If that’s not a sign of how quickly things are evolving, I don’t know what is.
