The Liquidity Dilemma and Solutions in the Multi-Chain Era

In the current context of the booming multi-chain development, an increasingly prominent issue is: how to allow ordinary users to participate in the dividends of the emerging ecosystem more fairly and efficiently, rather than just being the runners-up for the whales?

With the push of the modularization wave, from the multi-chain concept of Cosmos and Polkadot to the prosperity of Rollups in the Ethereum L2 era, and the rise of various application chains, more and more protocols and applications are starting to build dedicated chains for specific needs, attempting to seek the best balance in performance, cost, and functionality.

However, this diversity, while bringing more possibilities to the on-chain ecosystem, has also resulted in the problem of extremely fragmented Liquidity. According to incomplete statistics, there are more than a hundred Layer 2 solutions on Ethereum alone. Liquidity is not only dispersed on Ethereum and Layer 2, but is also severely isolated within the exclusive ecosystems of various emerging public chains/application chains.

This fragmentation phenomenon not only exacerbates the complexity of user operations and experiences but also greatly limits the further development of DeFi and on-chain applications. For Ethereum and L2, liquidity cannot flow freely, capital efficiency decreases, and the potential of on-chain Lego cannot be fully realized; for emerging public chains, it means that the migration costs and entry barriers are high, making it difficult to break the liquidity island effect from 0 to 1, and ecological expansion is hindered.

In short, the "entropy increase" trend in the multi-chain era has become the biggest curse of prosperity in the multi-chain era.

Against this backdrop, both users and developers are eager for funds to flow efficiently across DEXs, lending, and other on-chain protocols on any network, breaking down fragmented network barriers and improving user experience. Especially in the emerging public chain ecosystems outside of the Ethereum ecosystem, the yield opportunities in these ecosystems often have high attractiveness, and users need to be able to easily migrate assets from Ethereum or other chains to these emerging ecosystems to participate in their DeFi protocols, liquidity mining, or other yield opportunities.

For users, no matter how combinable, liquidity is always key. Therefore, if Ethereum and the multi-chain ecosystem are to continue to scale and thrive, it is urgent to efficiently integrate the liquidity resources scattered across multiple chains and platforms.

This requires the establishment of a unified technical framework and standards to combat "entropy increase", bringing broader applicability, Liquidity, and scalability to the multi-chain ecosystem. This will not only further promote the "unification" process of on-chain Liquidity but also push the multi-chain ecosystem towards maturity.

This demand and vision for "unity" also provide room for the development of comprehensive blockchain liquidity infrastructure. As an innovative issuance platform for comprehensive blockchain liquidity vault products, these platforms aim to efficiently integrate cross-chain liquidity resources for emerging public chains and application chains by providing customized liquidity fundraising solutions, breaking down liquidity islands, and promoting the efficient circulation of capital.

Build a Comprehensive Liquidity Network

From point to surface, some platforms are upgrading their original single-point solutions to more comprehensive, flexible, and customized full-chain Liquidity fundraising and management platforms. This is not only an evolution of product forms but also a key step in the transition from "point-to-point" Liquidity solutions to a "point-to-face" Liquidity network.

As a full-chain liquidity infrastructure, such platforms are dedicated to connecting liquidity assets on the Ethereum mainnet with the liquidity demands of emerging public chains and L2 ecosystems. Essentially, it is a full-chain liquidity customization solution aimed at diverse needs, covering liquidity support throughout the entire lifecycle from cold start to ecosystem expansion.

For public chains or protocols that have not yet launched their mainnet and are in the cold start phase, the platform supports project parties in raising the liquidity needed for early cold starts by publishing a pre-deposit treasury on the Ethereum mainnet, and using the funds for liquidity provision in DeFi protocols, liquidity support for RWA protocols, and investments in RWA assets, etc.

For projects that have already launched their mainnet and entered a mature operational phase, the platform supports the customization of vaults for specific liquidity yield scenarios to help the project ecosystem achieve rapid growth. This includes providing liquidity support for DeFi protocols on certain public chains to enhance capital efficiency; or supporting specific yield scenarios on particular chains through customized liquidity solutions, such as liquidity mining and staking rewards, to meet the high yield demands of specific ecosystems.

To meet the needs of a wider range of application scenarios, such platforms will also expand support for more mainstream assets, including but not limited to ETH, WETH, WBTC, USDT, USDC, and others.

From point to area, through this upgrade, the platform not only provides more flexible tools for emerging public chains and L2 but also builds a more efficient full-chain Liquidity network. Whether it's liquidity support from cold start to maturity stage or resource integration of cross-chain ecology, the aim is to become a key link in the on-chain Liquidity cycle.

This not only meets the diverse Liquidity needs but also efficiently integrates the Liquidity resources scattered across multiple chains to form an interconnected Liquidity network. Whether it is the cold start demand of emerging public chains or the expansion needs of mature ecosystems, such platforms will become their most reliable Liquidity partners.

Full Chain Liquidity Flywheel Effect

Incrementality is the core primitive of Web3. For a full-chain Liquidity platform, its core value lies not only in solving the liquidity isolation problem of emerging public chains and application chains, but also in forming a "full-chain Liquidity flywheel" that integrates multiple asset yields and the re-release of liquidity through its unique mechanism design.

The core of this flywheel effect revolves around the multiple benefits and liquidity re-release mechanism centered on LP Token.

First, after users deposit assets through the platform, they will receive LP Tokens. These tokens are not only proof of users' rights in the emerging public chain ecosystem, but also the key to unlocking multiple earnings.

On one hand, the assets deposited by users will directly participate in the emerging public chain ecosystem, such as liquidity mining rewards on certain chains and governance token airdrops. At the same time, the platform's automated strategies help users efficiently capture these local gains without having to deal with complex technical operations. This low-threshold participation method allows more users to easily enter the emerging ecosystem and seize early benefits.

On the other hand, the corresponding LP Token not only represents the user's rights in the emerging public chain ecosystem, but also packages the income of the emerging ecosystem into interest-bearing assets and connects with more mature mainnet infrastructure, possessing a high degree of financial composability. Users can seamlessly access DeFi financial facilities on Ethereum through LP Tokens, further releasing liquidity potential:

• Provide liquidity or trade on DEX
• Use lending protocols for collateralized borrowing
• Sell earnings using professional protocols

This mechanism not only allows a user's asset to be reused across multiple ecosystems, maximizing returns, but also significantly lowers the participation threshold for emerging ecosystems, enabling more users to efficiently participate in the local yield capture of the new public chain ecosystems.

Under the overlay of multiple returns, users' investment returns can be maximized, and the acceptance and recognition of the emerging ecosystem can quickly open up the situation, forming a positive flywheel effect: more users participating → more Liquidity injected → acceleration of emerging ecosystem development → enhancement of the value of returns wrapped assets → attracting more users to participate.

With the upgrading of the entire chain liquidity platform, it also means that it can better and more effectively connect the emerging ecosystems in the cold start stage with the mature ecosystems of different yield scenarios.

• Help emerging public chains raise cold start funds: Through the platform, emerging public chains can raise cold start funds on the Ethereum mainnet, obtaining the "from 0 to 1" Liquidity support needed for early development.
• Bringing excess returns back to mature markets: After growing and developing resources, the excess returns on the emerging public chain (Alpha) will be brought back to trade on the Ethereum mainnet, where financial services are mature, achieving a complete cycle of resources.

This dynamic adaptation mechanism enhances the compound ability of asset returns and further strengthens the market adaptability and competitiveness of the entire chain Liquidity platform.

The human demand for new assets is eternally present. Under the competitive landscape of the multi-chain era, the full-chain liquidity infrastructure is very likely to become a key lever for building liquidity niche assets and a prosperous on-chain ecosystem: by introducing a new yield structure that inherently possesses full-chain liquidity attributes, it can not only stimulate the stagnant on-chain ecosystem but also design products with higher capital efficiency and better yield forms along with composable DeFi scenarios, which not only satisfies users' pursuit of diversified returns but also provides efficient liquidity solutions for emerging public chains and mature ecosystems.

Conclusion

In the future, with the accelerated expansion of multi-chain ecosystems, the comprehensive liquidity infrastructure is expected to become a core hub connecting emerging public chains with mature markets, bringing more efficient and fair liquidity solutions to users and protocol parties.

From the liquidity dilemma of "entropy increase" to the ecological prosperity driven by "flywheel effect", redefining the liquidity infrastructure of Web3 is not only an inevitable path to further improve the liquidity issue across the entire chain, but also the optimal solution to propel the multi-chain ecosystem towards maturity.

As for whether it can reach the critical point of transformation in 2025, continuous observation is still needed.