The Liquidity Architects: How Boyco and Mitosis Solve DeFi's Cold Start Problem
The "cold start problem" represents a significant barrier to success for new DeFi protocols. Without sufficient day-one liquidity, protocols struggle to provide acceptable user experiences. Low liquidity causes high slippage and poor execution, creating a devastating snowball effect: it drives away users whose absence further depletes the already precarious infrastructure.
Traditional approaches to bootstrapping liquidity have revealed critical limitations:
Token incentives (and promises of high yields) attract mercenary capital that vanishes once rewards diminish. This way to bootstrap liquidity frequently results in artificial usage, limited short-term activity, token price suppression, and minimal long-term protocol loyalty—there's misalignment between those bursts of liquidity and the chain's long term vision.
Undisclosed contracts with VCs, market makers, family offices, etc. through exclusive token sales or treasury allocations exacerbate misalignment in incentive designs. While it may help initially, the TVL accrued is just a smokescreen—a temporary solution that depletes resources very quickly, doesn't reflect true market demand, and doesn't solve the fundamental coordination problem between users and chains. Moreover, it introduces centralization concerns, thus eroding trust from already skeptical participants.
While these kind of behaviors and market dynamics—points systems, airdrop farming, exaggerated yields—probably won't change in the foreseeable future due to being so ingrained in the space's psyche, there are products which are building solutions around liquidity bootstrapping.
Innovative mechanisms like Berachain Boyco and Mitosis Matrix are creating sophisticated frameworks for securing pre-launch liquidity commitments that align incentives between protocols, users, and liquidity providers.
This article examines how these solutions address the cold start problem: starting from their strengths and limitations, and exploring their potential to transform new protocol launches across the DeFi landscape.
The Foundation: Understanding Royco Protocol
Boyco's pre-launch liquidity solution is built upon the Royco Protocol foundation, which introduces Incentivized Action Markets (IAMs) for onchain activities.
Royco creates a marketplace with two key participants: Incentive Providers (IPs) offering rewards, and Action Providers (APs) performing specific onchain activities like supplying assets, staking funds, voting on proposals, etc.
The protocol facilitates the negotiation of incentive amounts through offers and counter-offers until both parties reach an agreement. Once terms are set, the AP's transactions are executed and the incentives allocated.
This approach delivers several advantages, with the main ones being:
- Market-driven incentive determination rather than predetermined rates
- Action Providers gain negotiating power previously reserved for institutional players
- A transparent and remunerative ecosystem for every party involved
By solving coordination problems that plagued previous liquidity bootstrapping attempts, Royco Protocol provides the essential foundation for Boyco's pre-launch liquidity mechanism.
Boyco: Transforming Launch Momentum into Sustained Growth
Boyco represents a groundbreaking approach to the cold start problem, specifically designed for the Berachain ecosystem. While most new chains experience significant attention and excitement at launch, Boyco is engineered to transform this initial momentum into sustainable growth for the application layer.
At its core, Boyco is a pre-launch liquidity platform that enables dApps to secure liquidity before Berachain's mainnet goes live. This fundamentally transforms the startups' trajectory: rather than spending years gradually building capital, they can position themselves for success from day one with robust liquidity already in place.
The mechanism allows applications to create pre-launch liquidity markets: dedicated pools where users can lock assets early to support the chain (and related dApps) launch with clearly defined incentives (tokens, points, etc.) and expiration dates. This creates a win-win scenario for both protocols and users—the former secure day-one liquidity, while the latter gain exposure to Berachain ecosystem ahead of mainnet.
The selection of Boyco participants revealed key strategic priorities from the Berachain team, who selected eligible applications based on the following criteria: the ability to "service important verticals for distribution & growth of a new chain" (e.g., DEX liquidity, lending, derivatives, yield vaults, staking/restaking) and major asset integration to maximize ecosystem composability.
Since the platform was built in collaboration with LayerZero and Stargate, the decision-making process also required assets to be LayerZero OFT-based, which on one side ensured seamless cross-chain functionality, but it also meant excluding non-compliant asset issuers.
Mitosis Matrix Vaults: An Alternative Approach
At its foundation, Mitosis recognizes that providing liquidity in DeFi represents a lending relationship—users effectively lend capital to protocols in exchange for future rewards. The protocol addresses a fundamental limitation of traditional DeFi where LPs positions remain illiquid and opaque, preventing the formation of sophisticated markets where users can implement risk management, enhance returns, and establish yield speculation mechanisms.
Matrix, one of Mitosis' two core Liquidity Frameworks, enables DeFi protocols seeking time-bound liquidity to propose curated campaigns with specific terms (lock-up periods, reward schedules, accepted assets) and offer to Mitosis LPs preferential yields in return. Participants can accept the proposals by committing their Vanilla Assets, and receive campaign-specific maAssets (tokenized representations of their positions) that track the amount of underlying capital and indicate eligibility for any corresponding rewards[1].
Comparative Advantages: When to Choose Matrix over Boyco
While both Boyco and Mitosis Matrix aim to solve pre-launch liquidity challenges, each offers distinct advantages that might make one more suitable than the other depending on specific circumstances.
Boyco has undoubtedly created significant value for the Berachain ecosystem and its users. Nonetheless, from a user experience perspective, there are several areas where the implementation could be enhanced to better serve liquidity providers and ecosystem participants.
Liquidity Proposal Dispersion
The incentivized pre-deposit Vaults were officially announced on Twitter at different times; they started on Christmas Day and extended until a couple of weeks later when the official Boyco comprehensive dashboard with all the pre-pre-deposit vaults was released[2].
This staggered approach created decision fatigue due to multiple factors. First, users without a preferred protocol found themselves evaluating multiple options simultaneously amid Berachain's FOMO-inducing marketing machine. Second, all the vaults available were hosted on each protocol's landing page, with accessible and unified front-end interfaces like Jumper's appearing only later.
This fragmented the entire user experience from the initial research up to the actual deposit process.
Absence of Direct Relationship Building
The Boyco campaign successfully met expectations by bootstrapping over $2b in pre-deposits for ecosystem applications with continuously growing TVL.
However, from a user engagement standpoint, this approach failed to foster community bonds with native Berachain dApps like Kodiak and Dolomite. Depositing through familiar, non-Berachain apps with Boyco functioning only as an intermediary left a sense of detachment from the Berachain ecosystem, despite committed liquidity—the user experience felt purely transactional.
This distinction became even more evident when I deposited through the Theo Matrix Vault on Mitosis, where I not only committed funds to the protocol but also became an active member of their community.
The integration of exclusive Discord roles and a direct relationship between protocols and LPs may lead to more committed liquidity beyond the initial incentivization phases—transforming the interaction from mere capital allocation into meaningful community participation.
Limited Asset Support
As mentioned earlier, Boyco required assets to be LayerZero OFT-based. While this wasn't a major limitation in practice—the supported assets were generally sufficient—it does represent a structural constraint. Mitosis, by contrast, leverages Hyperlane for cross-chain deposits through its Cross-chain Deposit Module (CCDM).
The CCDM Host (L1 side) and CCDM Client (L2 side) work together through Hyperlane's messaging protocol to enable more flexible asset handling and semantic batching, potentially enabling broader integration possibilities with various asset types[3].
For more on the advantages of open interop versus closed interop frameworks, see the following article about Hyperlane and Mitosis.
kumatycoon
Assets with Limited Composability
Locking liquidity in Boyco's pre-deposit incurred a significant lost-opportunity cost for participants.
StakeStone distinguished itself as one of the few participating protocols which officially offered beraSTONE (locked ETH) use cases with markets on Morpho, Gearbox, Pendle and Uniswap LP[4].
Mitosis employs a different strategy with its maAssets issued by Matrix, which are designed to be tradeable and composable. This enables potential for secondary markets that enhance overall capital efficiency in ways Boyco doesn't directly address.
Matrix Use Case Applied to Bera Vaults
A notable strength of Mitosis is its flexible architecture that could potentially incorporate Royco's IAMs—combining Matrix's asset composability with Royco's market-driven incentives.
Long-term liquidity commitments (e.g., Lombard Bitcoin Bera Vault from December 2024 to April 2025[5]) inevitably expose underlying assets to market volatility, including impactful events such as elections, institutional portfolio rebalancing, etc.
Given these circumstances, users typically must allocate additional liquidity elsewhere to hedge these locked positions. With truly composable assets, users could instead use their locked tokens as collateral to trade perpetual futures or execute other DeFi strategies.
The following is a hypothetical use case of how Mitosis could enhance a Boyco-like campaign
Consider the scenario of allocating 1 LBTC to Lombard Bitcoin Bera Vault via Mitosis Matrix Vault.
- You redeem 1 maLBTC_Bera upon deposit, which accrues yield from Berachain incentives
- You deposit maLBTC_Bera as collateral on a Mitosis-chain derivative exchange and open a 1 BTC short position
This composability delivers a powerful combination of benefits: LBTC points accrual (Lombard and Babylon), yields from the incentivized campaign (e.g., Berachain's native token, Kodiak, Dolomite), potential funding rate harvest from the short position, and hedge against market downturns.
This exemplifies how Mitosis enables effective money legos that maximize capital efficiency while managing risk.
Conclusion
Boyco and Mitosis embody the next generation of DeFi liquidity bootstrapping solutions, introducing sophisticated frameworks that address the persistent cold start problem. While Boyco leverages Royco's transparent market-driven incentives, Mitosis alchemizes locked liquidity into productive, composable assets through its Matrix framework—with Mitosis' flexible architecture potentially even incorporating Royco's IAMs in future iterations.
The evolution of successful protocol launches likely lies in these aligned incentive designs that prioritize transparency, direct LP relationships, and capital efficiency. As these models mature, they aspire to reshape how new chains and protocols secure and sustain their market position, potentially solving one of DeFi's most persistent challenges: converting initial capital inflows into a sustainable liquidity infrastructure.
References:
[1] Mitosis Organization. Mitosis Litepaper.
[2] Berachain Foundation. Tweets about Boyco.
[3] Mitosis Organization. Technical Architecture.
[4] StakeStone. Berachain Vault for Boyco markets.
[5] Lombard. Bitcoin Bera Vault for Boyco markets.
Mitosis Website | Mitosis X (prev. Twitter) | kumatycoon X (author)
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