Modefi Update Series Part 1: Project Evolution and Tokenomic Changes

Welcome to the first part of a four-part series where we’ll lay out our plans for the future.

TLDR Summary

• Two snapshots will be taken. The first will happen in November to determine buyout eligibility. Prior to the relaunch, a second snapshot will be taken to determine eligibility for the token swap.
• Within the coming months we will move to begin our next round of Beta testing while preparing for a rebrand. During this period, we will offer a reduced buyout option for anyone who does not wish to wait for the testing, rebrand, and relaunch to be completed.
• The ODO and all of our future products will use each blockchain’s native currency instead of our project’s token.
• The use case of the new token will be revenue generation — stakers will earn a portion of the revenue generated from all of our products.
• Prior to token relisting, we will unveil a full rebrand and announce additional revenue generating products beyond the ODO.

For more information on each point, see the related section below. This plan has been reached after careful consideration of all possible options, and is designed to accomplish the following:

1. Make the ODO and all of our future products suitable for wide adoption across all EVM chains.
2. Reinvigorate our brand and bring attention to our products.
3. Re-establish liquidity for token holders while strengthening the value proposition of the token itself.

Snapshot, and Future Token Claim

We will be taking a series of 2 snapshots of MOD balances.

The 1st snapshot (in November) will determine buyout eligibility. This option is being provided for those who wish to exchange their MOD tokens for ETH (at a reduced rate) instead of waiting for the rebrand and relisting process to conclude. More information on this option is provided later in the article.

The 2nd snapshot (date TBD) will take place prior to the relaunch and relisting.

Both snapshots will account for the balances of honest users who bridged tokens using Multichain and Matic, while excluding the tokens in the Multichain exploiter’s wallet.

Tokens held in Kucoin wallets will not be included. If you do not withdraw your tokens before the date of the 1st snapshot, you will be ineligible for the token buyout. Similarly, if you do not withdraw your tokens before the 2nd snapshot, you will be ineligible for the token swap.

In the new year, we will be launching the new token. In order to claim it, you must have an eligible balance recorded from the 2nd snapshot and you must also hold the corresponding quantity of the old MOD token.DO NOT sell, transfer, or otherwise lose your MOD tokens between the snapshot and the new token’s launch — doing so will make you ineligible to claim the new token.

Buyout Option — (for those who don’t wish to wait for relaunch)

In the period between the 1st and 2nd snapshot, the team will give the opportunity to exchange MOD tokens at a set price of 0.000007 ETH per token (approximately $0.0126 USD at the time of writing). This price has been determined by dividing the total Ether from the liquidity pool divided by the current circulating supply. More details regarding the calculations will be released before the buyout goes live.

The buyout process is planned to be automated through the use of a smart contract.

Since balances for the token swap will be determined by the 2nd snapshot, exercising the buyout option will exclude you from claiming the new token. If you intend to wait for the relaunch and relisting process to conclude, you should not use this option.

Changing the Base Currency of the ODO and Future Products

The value of MOD was always going to be dependent on our products being useful and seeing real world adoption.

Initially, the plan was to use MOD as the centerpiece of our products starting with the On-Demand Oracle. In theory, this design made sense — if people wanted to use the products, they would need the token. If people wanted to provide data and earn revenue for doing so, they needed to stake the token.

In practice, however, through feedback from potential clients and our own internal analysis, it became clear over time that using MOD in this way creates several obstacles that work against widespread adoption:

• If you don’t already hold MOD, you need to acquire it. We built an auto-conversion system to streamline this process, but this system is quite complex in its own right and introduces its own problems
• If we want to offer our products on multiple chains, MOD tokens need to be bridged to every single chain. This adds several steps that make it harder for adoption to happen.
• Every operation (depositing collateral, opening a request, filing a dispute, etc.) came with a gas cost, and as a general rule ERC-20 transfers and interactions are more expensive than base chain interactions.
• In addition to that, users also needed to set approvals for the MOD token at several spots within the system, adding to the cumulative costs.

So, what is the solution? The answer is surprisingly simple — all of our products will now run on the native currency of the chain they are deployed to.

For example, the On-Demand Oracle deployed to Fantom will run on FTM — requestors pay using FTM, validators earn FTM. In effect, it will assume the role that MOD used to fulfill.

If we put the ODO on Ethereum, it will use ETH. When we deploy any revenue generating product to any chain, they will use that chain’s native currency. You get the idea!

This design creates several advantages for adoption:

• For new users, the barrier to entry is much lower because there are no steps before someone can participate. No one needs to buy tokens before depositing collateral. If they are transacting on the network, they have everything they need already.
• No token approvals are needed since users are transacting in the chain’s native currency.
• Products can be scaled out across multiple chains far easier, expanding our reach.

All of this sounds great, but by now you are probably asking “what will the use of the project’s token be?”.

Use Case of the New Token

The answer to this question is straightforward: staking the new token will earn you a portion of the revenues (ETH, FTM, BNB, etc.) generated from all of our products going forward.

This keeps the value of our token firmly tied to the adoption, while also creating a far simpler system. The token can exist on a single chain, and be staked on that chain, while earning stakers revenue from across the cryptoverse.

The beauty of this setup is that only the people who hold and stake the token are eligible to earn revenues, but the people using the products don’t need to interact with it. From their perspective, they are simply using a tool that runs on the cryptocurrencies they already have (i.e. if you are using the Ethereum network, you already have ETH in your wallet).

Put another way, this design exponentially increases our potential user base, while allowing our stakers to be part of an exclusive group who earn revenues based on this usage.

Rebranding

A rebrand also gives us the opportunity to ‘stand out’ more within the space. From the beginning, price bots and even Metamask often confused our token with Modum, a project that also used the ticker MOD. This persisted for quite a while, despite the fact that Modum has been inactive for several years. There are also (at least) five other projects with the ticker MOD, or starting with the letters MOD.

A rebrand will give us both a fresh start in terms of brand perception, but also the opportunity to create a more distinctive name and token ticker.

In addition to the rebranding, we can also share that we are working on multiple revenue generating products beyond the ODO, at least one of which will be ready for the token relaunch.

Strategic Liquidity Restructuring

After the Multichain breach, we removed ~147.77 ETH and ~1,599,332 MOD tokens from Uniswap in order to prevent the possibility of the hacker draining liquidity. Those funds have been held in the following multisig address since that time.

The overhaul and relaunch of our project gave the team the opportunity to reassess our allocation of funds. Ultimately, we came to the conclusion that we can create more value for token holders by utilizing some of our Ethereum from the liquidity pool to further develop and promote our products and brand.

When the token is relisted in the new year, we will be maintaining the same token to Ethereum ratio, while adjusting the total amount of available liquidity. While this adjustment will depend on several factors, we are expecting a minimum of 50% utilization (73.885 ETH + 799,666 new tokens).

It is important to note that the effects of the liquidity adjustment will be offset by the reduction in circulating supply of the new token. We anticipate this reduction due to several factors, including:

• Users who have lost the keys to addresses containing the outgoing MOD token, or who have simply forgotten about it.
• Users who exercise the buyout option won’t be eligible to claim the new token.
• A significant quantity of tokens won’t be withdrawn from Kucoin before the final snapshot.

The long-term success of our project and our token hinges upon awareness and adoption of our products, leading to revenue generation for token stakers. This liquidity restructuring gives the team additional resources to pursue these goals.

Aligned Interests

Between issues specific to our project (lengthy development cycle, Kucoin delisting) and situations beyond our control (extended bear market, Multichain breach), it’s fair to say that the last couple years have presented some challenges.

The next six months are a pivotal but also very exciting period for the project. The second Beta test of the On Demand Oracle will begin soon. Its design has been vastly upgraded, and due to the changes outlined earlier we believe that it is now capable of realizing its potential as a widely adopted, first of its kind tool.

Above, we have done our best to provide full transparency while also explaining why we are optimistic for the future of the project and our token. We hope you will continue with us on our journey as we work to deliver on the potential of the technology we are building.

More Updates on the Way

As we mentioned in the opening, this article was the first in a four part series coming your way. Now that we have covered the token situation, we will move to various other topics including ODO design, the upcoming beta launch and a new project roadmap.