Composability
Definition
Composability is the ability for DeFi protocols to interact and build upon each other seamlessly, often called 'money legos.' Because smart contracts are open and permissionless, any protocol can integrate with any other, creating complex financial products by combining simple building blocks. This is a defining feature of DeFi that traditional finance lacks.
Example
A user can deposit ETH into Lido (getting stETH), use stETH as collateral on Aave (borrowing USDC), then provide USDC liquidity on Curve — three protocols composed together.
Risks to Consider
- Cascading failures across protocols
- Dependency risk
- Complexity risk
Common Questions
Why is composability important?
Composability allows developers to build on existing protocols rather than starting from scratch, accelerating innovation. Users benefit from increasingly sophisticated strategies built from simple, audited components.
