“Money legos” might be an apt metaphor for what decentralized finance (DeFi) does, but since the summer another one has applied: jackpot.
Money legos is the term used to describe the way Ethereum allows different financial services to be plugged into each other, also known as composability. That used to be mostly a buzzword, but over the past year composability has become a very real competitive advantage for DeFi. Mixing and matching smart contracts on the fly has proven incredibly valuable.
But there remains a $10.9 billion question: Will composability work as well on Ethereum 2.0 as it does now on the original version of the world computer?
“Composability has really mattered because it allows innovation to compound – entrepreneurs can compose with other entrepreneurs’ creations,” Chris Burniske of the venture firm Placeholder told CoinDesk in a phone call. “So many of the services that we get on a day-to-day basis in our traditional meatspace are composed of underlying services.”
That is, Netflix is built on many services, such as content delivery networks, storage providers, analytics products and lots of other solutions most normal people have never even heard of.
All that stacking relies on verification and centralized identity, but on Ethereum stuff can be mixed and matched without the need for your name.
However, the ease of composability is running up against the reality of Ethereum’s throughput capacity. This is a problem everyone saw coming from the beginning of the project, as CoinDesk Research recently explained in a report on the next version of Ethereum.
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