DeFi Faces 50% Liquidity Fragmentation Across Multiple Chains

Decentralized finance, or DeFi, is built on the principle of composability, which allows different financial instruments and protocols to work together seamlessly. However, as new blockchains proliferate, liquidity is becoming fragmented, and incentives are weakening. What was once a unified environment has now splintered into dozens of siloed markets, posing a significant challenge to the future of DeFi.

Fractured liquidity is emerging as DeFi’s central scalability risk. While expanding to multiple chains was a natural response to Ethereum’s scalability limits, it has created a new set of problems. DeFi protocols rely on deep, composable liquidity—a shared pool of assets that can be borrowed, swapped, and layered into strategies. In a multichain world, this assumption no longer holds. Liquidity is now spread across dozens of Layer 1s, rollups, and appchains, making it chain-specific and often inaccessible outside the environment where it’s deposited.

This fragmentation leads to fundamental inefficiencies, including thinner markets, higher slippage, and weaker user and protocol incentives. Even the best-designed economic models begin to break down when the liquidity they depend on is no longer dense. Protocols that worked seamlessly on Ethereum mainnet now struggle to deliver the same outcomes elsewhere, not because their models are flawed, but because the context they operate in has changed.

The shift to multichain has been necessary for scaling, but without a way to emulate composability across chains, it risks undermining the very foundations of DeFi’s success. Much of the attention in multichain DeFi has been focused on user experience (UX) friction, such as switching wallets, acquiring gas tokens, and navigating bridge user interfaces. These are surface-level symptoms of a deeper problem: the lack of a unified execution layer.

Users who try to execute even basic crosschain actions often encounter inconsistent interfaces, fragmented pricing, and uncertain outcomes. While some progress has been made with swap-and-bridge solutions, liquidity fragmentation and routing inefficiencies persist. Most of these systems rely on isolated liquidity pools per chain, with duplicative incentives and limited routing paths. Even if the front-end feels unified, the back-end remains fragmented, capital inefficient, and hard to compose.

If liquidity can’t move easily across chains or composing strategies requires bridging, wrapping, or interacting with multiple apps, then DeFi can’t scale meaningfully. Solvers, sophisticated actors who use their own capital and logic to join fragmented actions on the user’s behalf, can emulate synchrony. A user simply expresses an intent—swap, deposit, interact—and the solver executes across chains to fulfill it, abstracting away the complexity underneath.

Intents-based infrastructure solves for interoperability, not consolidation. The ERC-7683 standardizes how these crosschain intents are expressed and fulfilled, enabling invisible bridging: one-click swaps, deposits, or interactions that move across chains without the user needing to manage the complexity—even between ecosystems that weren’t designed to interoperate. A user on Solana can swap into a vault on Arbitrum. Liquidity can move into and out of BNB Chain, historically siloed from Ethereum-native standards. Strategies become portable. Protocols become interoperable.

The result isn’t perfect uniformity but something more resilient: systems that work together despite their differences. Instead of forcing every chain to adopt the same standards, intents let users define outcomes while solvers execute across ecosystems, preserving local strengths while enabling global liquidity. They don’t erase multichain complexity. They route around it.

Multichain isn’t theoretical anymore. It’s the environment in which DeFi operates today. Unless we solve for composability at the infrastructure layer, DeFi may not scale with it. The risk isn’t dramatic collapse. It’s slow erosion: thinner liquidity, weaker incentives, and fewer things that work across chains. Solver infrastructure offers a way out—not by forcing uniformity but by mimicking the experience of synchrony across fragmented chains. That’s how we preserve what made DeFi powerful in the first place and how we unlock what comes next.