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Glossary

Composable DeFi

November 21, 2023 - Around 3 mins mins to read

Understanding Composable DeFi

Composable DeFi is a term used to describe the functionality of smart contracts that brings together the entire decentralized finance (DeFi) ecosystem. Since the introduction of programmable smart contracts on the Ethereum blockchain, the DeFi ecosystem has emerged as a permissionless and borderless marketplace, disrupting traditional financial structures. Composability allows different components within the DeFi system, including decentralized exchanges (DEXs), lending and borrowing protocols, collateralized loans, synthetic assets, leveraged trading, futures markets, and payment networks, to work together seamlessly. This creates a parallel financial system that is accessible globally without the need for centralized authorities. Composable DeFi empowers developers to utilize existing protocols and dApps without any special permissions, enabling the development of new use cases.

How Composability Functions in DeFi

DeFi dApps and protocols, often referred to as “Money Legos,” are open-source, enabling them to communicate and interact with one another. This open-source nature allows dApps and protocols to leverage each other’s code and functionality, resulting in a synergistic effect. For instance, on the Ethereum blockchain, developers can build dApps and integrate elements from existing protocols by paying the gas fee for transactions. Composability, which is embedded in smart contracts, facilitates complex strategies such as borrowing ERC-20 tokens from one platform, converting them into another ERC-20 token on a different platform, and swapping them for other ERC-20 tokens. This flexibility and interoperability are fundamental aspects of composable DeFi.

Marius George Ciubotariu, the Project Head at Hubble Protocol, provides his perspective on composable DeFi:

“All DeFi dApps and protocols are like building blocks because they exist on a global platform without any barriers. This means you can select any building block, combine it with another, and create your own masterpiece. The possibilities are limitless. At Hubble Protocol, we utilize the composability feature of smart contracts to develop a stablecoin that generates yield and is collateralized with a basket of assets on the Solana blockchain. This approach enhances capital efficiency while accumulating yield.”

About the Author:

Marius George Ciubotariu is the Project Lead of Hubble Protocol, the DeFi hub of Solana. With over a decade of experience in programming, data analysis, and project management, Marius is a blockchain enthusiast and a strong advocate for DeFi. Throughout his career, he has held various positions in web development, financial analysis and research, wealth management, and software engineering. Prior to joining Hubble Protocol, Marius has worked with renowned mainstream brands such as Bucharest Stock Exchange, Morgan Stanley, and Bloomberg LP. Connect with Marius on LinkedIn.

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Coincu

Glossary

Composable DeFi

Understanding Composable DeFi

Composable DeFi is a term used to describe the functionality of smart contracts that brings together the entire decentralized finance (DeFi) ecosystem. Since the introduction of programmable smart contracts on the Ethereum blockchain, the DeFi ecosystem has emerged as a permissionless and borderless marketplace, disrupting traditional financial structures. Composability allows different components within the DeFi system, including decentralized exchanges (DEXs), lending and borrowing protocols, collateralized loans, synthetic assets, leveraged trading, futures markets, and payment networks, to work together seamlessly. This creates a parallel financial system that is accessible globally without the need for centralized authorities. Composable DeFi empowers developers to utilize existing protocols and dApps without any special permissions, enabling the development of new use cases.

How Composability Functions in DeFi

DeFi dApps and protocols, often referred to as “Money Legos,” are open-source, enabling them to communicate and interact with one another. This open-source nature allows dApps and protocols to leverage each other’s code and functionality, resulting in a synergistic effect. For instance, on the Ethereum blockchain, developers can build dApps and integrate elements from existing protocols by paying the gas fee for transactions. Composability, which is embedded in smart contracts, facilitates complex strategies such as borrowing ERC-20 tokens from one platform, converting them into another ERC-20 token on a different platform, and swapping them for other ERC-20 tokens. This flexibility and interoperability are fundamental aspects of composable DeFi.

Marius George Ciubotariu, the Project Head at Hubble Protocol, provides his perspective on composable DeFi:

“All DeFi dApps and protocols are like building blocks because they exist on a global platform without any barriers. This means you can select any building block, combine it with another, and create your own masterpiece. The possibilities are limitless. At Hubble Protocol, we utilize the composability feature of smart contracts to develop a stablecoin that generates yield and is collateralized with a basket of assets on the Solana blockchain. This approach enhances capital efficiency while accumulating yield.”

About the Author:

Marius George Ciubotariu is the Project Lead of Hubble Protocol, the DeFi hub of Solana. With over a decade of experience in programming, data analysis, and project management, Marius is a blockchain enthusiast and a strong advocate for DeFi. Throughout his career, he has held various positions in web development, financial analysis and research, wealth management, and software engineering. Prior to joining Hubble Protocol, Marius has worked with renowned mainstream brands such as Bucharest Stock Exchange, Morgan Stanley, and Bloomberg LP. Connect with Marius on LinkedIn.

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