How Permissionless Interoperability Scales Modular Liquidity
Cross-chain activities in the modular landscape surpass simple asset transfers. Complex transactions involving multiple specialized blockchains will redefine the blockchain and DeFi experience as we know it. With that, cross-chain liquidity is the core component of the modular ecosystem that empowers the new chapter in crypto.
Mitosis proposes modular liquidity, the next-generation cross-chain liquidity that scales with the entire blockchain ecosystem. Mitosis reshapes the liquidity providers’ (LP) yield stack and protocol security by imbuing composability to its locked LP assets.
Modular liquidity requires efficient, reliable, and scalable cross-chain connectivity. This article discusses how Hyperlane’s permissionless interoperability augments Mitosis in revolutionizing cross-chain liquidity.
Liquidity Networks and AMBs
Today’s liquidity networks require arbitrary message bridge (AMB) solutions for chain connectivity. In other words, an AMB’s ability to integrate new networks dictates the attached liquidity network’s chain coverage. This subordinated structure forces permissioned interoperability on liquidity networks.
Permissioned interoperability obstructs liquidity networks’ growth. The manual integration process of reviewing and allowing chains to connect results in market expansion inefficiency. Liquidity networks allocate precious resources to study ecosystems’ intricate politics, unit economics, and security risks to find adequate candidates. Time and talent spent on such endeavors translate to missed business opportunities.
Permissioned interoperability also presents a more severe problem: the fragmentation of liquidity networks. The siloed structure of liquidity network<>AMB pairs restricts the spectrum of demands liquidity networks can service. Confinement to a manually catered group of networks means serving only a subset of the entire cross-chain needs.
In short, today’s interoperability stack is unsuitable for addressing the upcoming proliferation of modular liquidity.
The Hyperlane Solution
Hyperlane proposes a novel, out-of-the-box alternative to the legacy interoperability stack. Hyperlane’s permissionless interoperability has the following distinctive features:
Permissionless deployment: Allows bringing the Hyperlane interoperability stack to any chain without relying on the Hyperlane team
Modular security: Leverages interchain security module (ISM) to allow developers to customize security measures to specific needs
Hyperlane’s interoperability stack enables a liquidity network to scale with the upcoming modular blockchains. Chains can start servicing cross-chain features by connecting to a liquidity network without unnecessarily devoting valuable resources. Liquidity networks can tailor security solutions that correspond to their needs instead of relying on a particular AMB’s proprietary security assumptions. Hyperlane liberates cross-chain liquidity from the legacy subordinated structure and expands the coverage potential of liquidity networks.
How Mitosis x Hyperlane Works
Hyperlane’s permissionless interoperability helps Mitosis expand its presence across the upcoming modular blockchains. By using Hyperlane, the Mitosis team is not constrained by the connectivity of the underlying AMB solution and saves on the chain integration costs. Also, Mitosis can freely upgrade or modify its interoperability security stack anytime by customizing its ISM.
Mitosis utilizes the composability of locked assets to bring forth a scalable liquidity protocol. Cross-chain liquidity locked in Mitosis gains composability via a tokenized derivative called $miAssets. $miAssets are 1:1 convertible with the underlying LP assets and exist in the networks supported by Mitosis. LPs can participate in DeFi applications on different chains to stay liquid while earning the Mitosis protocol fees.
LPs can also import $miAssets to the Mitosis blockchain to experience its unified $miAsset ecosystem. Some of its use cases are as follows:
Native cross-chain swaps on Mitosis: Natively trade assets from different networks on a $miAsset-based DEX on the Mitosis blockchain. Eliminates the necessity of multiple token bridging and wallets
Native cross-chain lending/borrowing: Lend/borrow different native assets on Mitosis with $miAssets
$miAsset-powered Mitosis ISM: LPs can contribute to the protocol’s interoperability security and earn token rewards by delegating $miAssets to Mitosis ISM.
Hyperlane also contributes to the proliferation of $miAsset-based ecosystem. The complex, multi-chain $miAsset use cases mentioned above require a reliable, efficient interoperability method. Hyperlane imbues Mitosis with the versatility to quickly integrate the upcoming modular networks and expand the $miAsset usages.
What’s Next
Since 2023, Mitosis and Hyperlane have been working hand in hand to redefine cross-chain liquidity. Mitosis will soon start rolling out its exciting features to bring modular liquidity to reality. For detailed information on the roadmap, please visit our introduction article here.
Please follow our journey and participate in Discord and X. We’ll run regular AMAs & podcasts and provide other essential updates to keep you in the loop. For those interested in how Mitosis works, take a deeper dive with our technical documentation.
