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Overview

Background​

In DeFi, liquidity represents the lifeblood of any protocol's operations. While private deals with large liquidity providers ("whales") have been the primary method for protocols to bootstrap liquidity, this model alone will not be sufficient for DeFi's continued growth and mass adoption. A more inclusive, transparent system is needed to unlock the vast potential of Passive Liquidity. The private nature of liquidity negotiations blocks price discovery - the process by which buyers and sellers determine the fair market value of an asset. Without transparent pricing information in the market, protocols can't effectively compare costs, and liquidity providers can't gauge the true value of their capital. This information asymmetry makes it challenging to establish fair market prices that could attract broader participation in DeFi liquidity. The current system creates a limiting cycle where protocols primarily focus on whale relationships, while regular liquidity providers have limited opportunities to participate effectively. Much of the market's liquidity behaves as mercenary capital, moving between private deals rather than forming sustainable protocol relationships. EOL introduces transparent price discovery mechanisms to complement existing practices, aiming to create a more inclusive and efficient DeFi ecosystem.

EOL Allocation Governance​

  • Protocols interested in the EOL can initiate forum discussions. Proposals include information such as the protocol's description, security profile, and details of its offering.
  • Forum Discussion: All Mitosis participants, including EOL LPs, dApps with delegated voting power, and candidate protocols can share their opinions in the forum discussion. Based on the proposal, the discussion covers topics such as the protocol's safety and the offering's feasibility.
  • Initiation Vote: LPs and dApps vote on the Initiation Proposal to determine whether the Mitosis Ecosystem will opt-in to provide a portion of EOL to the protocol.
  • Gauge Vote: If a protocol passes the Initiation Vote, the protocol enters the list of protocols in the Gauge Proposal. LPs and dApps vote on the listed protocols to determine what portion of EOL each protocol will receive.

Reward Distribution​

  • Based on the result of the Gauge Vote, the EOL Vault distributes its liquidity to the protocols.
  • The earnings of the EOL accumulate in the Mitosis Vaults. Mitosis distributes rewards to miAsset holders regardless of the network they chose for their deposits. This approach ensures that LPs enjoy an optimized yield of multi-chain sources.
  • For the miAssets deposited into dApps, the rewards initially go to the dApps. Mitosis provides a module that allows dApps to distribute these rewards to LPs.