Kaizen in Mitosis: How the predictive market integrates with perpetual futures in Web3

Do you know the Kaizen prediction market? It is one of the most accurate DeFi experiments in recent months – a combination of prediction markets with perpetual futures exchanges on the Mitosis blockchain. Since mid-December 2024, the platform has been in a closed beta testing phase, accessible only to a specialized cohort of early users. This is not just a regular beta – it’s a laboratory for the future of decentralized finance.

Instead of the traditional approach, where the prediction market operates in isolation, Kaizen does something much more ambitious: it automatically hedges each position across connected Perp DEXes. The result? Deep liquidity, better price discovery, and – most importantly – a new category of arbitrage opportunities for traders.

How does this system actually work?

Let’s start with the basics. The user creates a forecast – deciding which asset, at what price level, and within what time horizon. For example: “Ethereum will surpass $5000 within 30 days.” Nothing new so far.

But here comes the innovation. Special market participants called Solvers competitively provide probability estimates for each forecast. It’s not manual matching – it’s an automated system where each Solver’s quote simultaneously opens a hedging position on an external perpetual futures exchange. The Solver bears no risk because its exposure is immediately neutralized by a hedge on the Perp DEX.

This architecture fundamentally changes the dynamics of prediction markets. Traditional platforms struggle with fragmented liquidity – lacking professional market makers, leading to inefficient prices. Kaizen solves this by attracting professionals with the confidence that every position can be hedged.

Capital that earns even while waiting

Another element is miUSDC – an interest-bearing version of USDC. When you deposit USDC while waiting for a forecast to settle, it automatically converts into miUSDC and accrues interest. It’s a small change, but the effect is transformative – solving the classic DeFi problem where capital remains idle between transactions.

For users seeking returns on their holdings, this is an elegant alternative. For the protocol itself, it’s a source of efficiency – capital works on multiple levels simultaneously.

Why Mitosis and not other blockchains?

Kaizen operates on Mitosis, a layer 1 protocol designed specifically for cross-chain liquidity and interoperability. The MITO token plays a key role in the ecosystem.

The choice is not accidental. Mitosis has a modular architecture, low transaction fees, and protocols for cross-chain communication. For an application like Kaizen, which needs to integrate with Perp DEXes across different networks, it’s an ideal foundation. The blockchain itself isn’t the star – but as a foundation for advanced financial applications, it performs its role perfectly.

Test cohorts: how is the beta progressing?

The closed beta launched in the first half of December 2024. The first user cohort – a selected group of early adopters – gained access to core features: creating forecasts, competitive Solver quoting, and settlements in miUSDC.

This phased rollout has a clear goal: monitor performance, identify bottlenecks, gather feedback before a wider launch. In the first half of 2025, the team plans additional cohorts, each with expanded functionality and more assets.

Each cohort functions as a control group – allowing developers to verify that the system truly scales safely under increasing trading load.

Architecture versus tradition: what has changed?

Comparison speaks louder than words. Traditional prediction markets rely solely on liquidity from platform users. Kaizen sources liquidity directly from the Perp DEX ecosystem – a thousands-fold larger capital pool.

Traditional platforms manage risk manually or algorithmically – always with some delay. Kaizen automatically hedges each position in real-time, eliminating systemic risk before it arises.

Traditional platforms require capital – users deposit, wait, and capital remains idle. Kaizen makes capital work – miUSDC generates interest while waiting.

Who benefits?

Retail traders gain access to professionally priced prediction markets without liquidity crisis risk.

Professional traders and funds can develop arbitrage strategies between prediction markets and perpetual futures – a completely new asset class for trading.

Solvers – professional market makers – have guaranteed income through professional quoting, with full risk coverage.

The Mitosis protocol expands its ecosystem with the most advanced financial application to date.

What’s next?

The regulatory landscape for prediction markets continues to evolve. But Kaizen’s architecture – with its advanced risk management, professional market-making, and integration with reputable DeFi – could change regulators’ perceptions. Platforms demonstrating advanced security and professionalism are often treated differently than typical gambling games.

In terms of market trends, this synergy between prediction markets and perpetual futures could become a broad pattern in DeFi. Other protocols will likely experiment with similar integrations.

FAQ – quick answers

What is the Kaizen test cohort? It’s a specialized group of users who receive access to the beta in stages. Each cohort tests new features and provides feedback before wider deployment.

What do Solvers do? They compete to provide the most accurate probability estimates for each forecast, while their exposure is automatically hedged on Perp DEXes.

Is miUSDC safe? It’s an interest-bearing version of USDC – as safe as the original stablecoin, plus additional interest on deposits.

When can I join? Currently, it’s a closed beta for selected users. Additional cohorts will open gradually in 2025.

Why follow Kaizen? Because it models how advanced financial applications can integrate within Web3 – lessons here will be transferred across the entire DeFi ecosystem.