Composability is the only way DeFi will survive

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DeFi promised a financial revolution, a world where users could create custom strategies by seamlessly stacking protocols like “legos of money.” But the reality is disappointing: Only 10% of crypto holders are active monthly users, meaning less than 1% of the global population regularly engages with DeFi. Meanwhile, the amount of layer-2 chains on major networks like Ethereum has also increased. Conclusion? Complexity and fragmentation make it difficult, if not impossible, for most people to participate.

The answer is composability: the ability to combine various DeFi protocols and tools into a cohesive, functional strategy. This is the key to making DeFi protocols work together seamlessly and transforming the space from a technical labyrinth to an open financial system accessible to everyone. Like e-commerce that Shopify has transformed, true composability will allow users to create, adapt and optimize financial strategies in minutes, without any technical expertise. This is the missing piece that could finally make DeFi practical for everyone.

The dream of ‘money legos’ and the reality of DeFi

This idea of ​​composability fueled the initial excitement around DeFi. The concept of “money legos” promised users the ability to “stack” protocols like building blocks and create custom financial solutions with ease. In theory, composability would offer casual users a transparent, modular system where strategies can be put together as intuitively as putting together Legos.

It’s a powerful vision: DeFi as a seamless, Lego-like experience with no barriers, no friction, where users can effortlessly stack protocols to create personalized financial solutions. But today, most DeFi users encounter a fragmented network of isolated protocols and cumbersome interfaces. Each tool feels disconnected, requiring users to switch between platforms, re-enter data, and manually combine strategies.

This is far from intuitive. DeFi’s current user experience is often frustrating and exclusive, and is only accessible to people with advanced technical skills. And DeFi is getting more complex: L2 solutions on chains like Ethereum support scalability; they also introduced new layers of complexity, creating silos that inhibit interoperability.

This only highlights the critical importance of malleability; without this, the entire DeFi ecosystem risks becoming even more fragmented with isolated protocols that complicate rather than enhance the user experience. But with emerging solutions to unify these protocols, the accessible, user-friendly DeFi ecosystem we envision may finally be within reach.

Drag-and-drop composability: A game changer for DeFi

Imagine creating a DeFi strategy as easy as dragging and dropping elements into place. This kind of intuitive composability will eventually bring DeFi’s “legos of money” vision to life, transforming it from a niche expert-only playground into a truly accessible financial ecosystem. In a fully composable DeFi environment, users can layer protocols to create dynamic, customizable financial solutions. DeFi will transition from a fragmented, proprietary system to an open, adaptable platform where anyone can freely innovate.

Consider the possibilities: A user could combine lending and yield farming protocols to maximize returns or layer insurance with liquidity protocols to manage risk; And all in a few clicks. If markets change, they can adjust strategies on the fly or change protocols without disrupting the entire setup. With composability, users can create solutions as unique as their financial goals, seamlessly adapt to change, and experiment with new configurations in real time.

Drag-and-drop composability will finally unlock DeFi’s full potential for everyone from first-time crypto users to experienced investors. The days of juggling disconnected platforms and deciphering technical jargon would be over. True composability will democratize financial experimentation, turning DeFi into a system that is as empowering as it is accessible. When users can shape their financial strategies with this kind of flexibility and ease, DeFi will not only deliver on its promises, but it could also completely revolutionize the way we think about personal finance.

Making DeFi applicable for institutions

But malleability isn’t just for individuals; it is also the key to unlocking institutional participation in DeFi. Today, institutions are hesitant to enter DeFi due to high barriers such as fragmented protocols and complex, manual portfolio management. In order for organizations to safely deploy large-scale investments, they need a predictable, scalable and seamlessly integrated system; These are qualities that only a composable DeFi ecosystem can offer.

Composability allows organizations to combine protocols into fluid, efficient strategies, eliminating the friction and operational complexity that currently hinders them. Imagine if an institution could assemble a diversified DeFi portfolio with the same ease and customization as individuals—stacking lending, liquidity, and risk management protocols into a coherent strategy without a complex web of manual steps. This composable structure will provide the flexibility and predictability that institutions need, making DeFi as suitable for them as any traditional financial platform.

The impact of corporate participation will be transformative. Through composability, DeFi can finally bridge the gap between innovative potential and real-world scalability, invite new capital flows, and accelerate the growth of the industry. This change isn’t just a feature upgrade; This is the basis for the maturation of DeFi and positions it as a serious alternative to traditional finance on a global scale.

Composability will decide the future of DeFi

DeFi stands at a critical juncture. Without malleability, there is a risk of remaining fragmented and inaccessible; a complex maze that can only be navigated by a select few. But based on composability, DeFi can move beyond its niche and evolve into a transformative system that gives users the power to innovate, customize, and control their financial future. The long-promised vision of “money legos” is finally achievable; if formability becomes the industry standard.

Formability is not just a property; this is the cornerstone of the future of DeFi. It will determine whether DeFi will become a universally accessible toolset for financial innovation or remain a fringe corner of finance. For DeFi to reach its full potential and deliver on its promise, composability must lead the way and make financial empowerment accessible to everyone, as it was always meant to be.

Kurapika

Kurapika is the founder and CEO of Factor, a DeFi middleware protocol that enables creators to easily build innovative DeFi strategies and applications.