Introduction

Problem Statement

In the world of decentralized finance (DeFi), on-chain liquidity serves as the lifeblood of the ecosystem. Without sufficient liquidity, DeFi platforms struggle to offer competitive rates, execute trades efficiently, and attract users. Yet, the liquidity that should power these ecosystems often remains locked or moves off-chain, causing blockchains to compete in a zero-sum game. This competition often leads to private deals between DeFi protocols and large liquidity providers, or "whales." Such negotiations introduce centralization risk by giving a single stakeholder the decision-making power over a significant portion of liquidity. The resulting token price fluctuations further stifle the ecosystem’s potential.

Mitosis

Mitosis introduces a novel approach to managing and distributing on-chain liquidity by embedding a marketplace within each blockchain. The Mitosis Chain acts as the central hub where liquidity supply and demand are matched, while Mitosis Vaults on each chain hold and allocate liquidity to decentralized applications (dApps) based on real-time market decisions.