Dynamic transverse mode instability (TMI) has become one of the primary limitations for power scaling of high-power fiber lasers. Experimental evidence has shown that static mode degradation can suppress the dynamic TMI effect. This study reveals the physical mechanisms behind the mitigation of dynamic TMI in two-mode fiber lasers through static mode degradation. Using a dynamic TMI model based on the two-beam coupling theory, we differentiate the impacts of relative intensity noise and the proportion of higher-order mode in the seed on TMI. Static mode degradation modifies the transverse gain distribution, thereby affecting the overlap between the thermally induced refractive index grating and the interference light field, which inhibits dynamic mode coupling. Our findings indicate that the effectiveness of this suppression is significantly influenced by the gain saturation. By enhancing gain saturation through strategies such as optimizing the pump injection direction, adjusting the pump wavelength, and reducing the core-to-cladding ratio, the suppression of TMI can be maximized, which is essential for advancing the performance and stability of these laser systems.