Scalability Problem

Scalability of Liquidity Network

The scalability required of a liquidity network encompasses several aspects. This includes scalability as the volume of operable liquidity, scalability in the range of networks supported by the protocol, and scalability in ensuring the secure growth of the protocol.

All aspects of scalability are crucial for liquidity networks. Depending on scalability, a liquidity network can either act as a catalyst for the broader adoption of the modular era or become a constraining bottleneck that hinders its progress.

However, current liquidity networks are not sufficiently scalable to cope with the growth of the cross-chain DeFi market in the modular era.

Scalability Problems

  1. Capital Efficiency: Cross-chain liquidity is only being used for cross-chain transfer

    The volume of operable liquidity is directly tied to usability, deciding factors such as the extent of slippage and the speed of transaction settlements. However, current liquidity networks are unsuitable for operating large volumes of liquidity because they miss out on usage opportunities other than cross-chain transfer demands.

  2. Interoperability: The network coverage of current liquidity networks is subordinate to their underlying arbitrary message bridge (AMB) protocol

    The scalability of supported networks is important for both users and application builders, as users need to move their assets freely without concerns about whether the base liquidity network supports a particular network. However, current liquidity networks cannot scale beyond the permissioned interoperability of the underlying AMB layer.

  3. Security: The security measures of current liquidity networks are often not measurable and limit their growth potential

    Security is a critical backbone of a protocol's scalability because as the protocol grows, it becomes a larger target for exploits. This means that all users must bear the increased risk as the protocol grows if security is not robust enough. However, security for current liquidity networks is often hard to measure and not objectively proven, limiting the protocol’s capacity to grow.

Mitosis Liquidity Protocol

The Mitosis Liquidity Protocol is meticulously designed to tackle the three aforementioned challenges. Let's delve into how Mitosis achieves scalability in these thee aspects.

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