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Composability on the Blockchain

Just like building your dream amusement park by putting together different attractions, composability lets developers build incredible digital creations by combining smart contracts and applications in innovative ways.

Rebecca Lalav
Rebecca LalavAug 28, 2023
Composability on the Blockchain

Think about how you might create a virtual amusement park. You have roller coaster pieces, Ferris wheel parts, and ticket booth designs. Composability means you can connect these parts in creative ways to build an entire amusement park with rides, games, and everything people need to have a blast. In the world of technology and blockchain, it’s kind of like that. Different computer programs, called smart contracts, are your special tools. Composability lets you connect these smart contracts together to make new, complex systems that can do things like manage money, trade assets, or create unique online services.

Just like building your dream amusement park by putting together different attractions, composability lets developers build incredible digital creations by combining smart contracts and applications in innovative ways.

Why Composability Matters for Web3

Composability is necessary for creating an interoperable system where disparate elements can connect seamlessly. Components of blockchain technology, such as dApps, decentralized exchanges (DEXs), and decentralized autonomous organizations (DAOs), are composable by nature, allowing them to be reassembled, duplicated, or integrated into one another. Blockchain composability typically occurs at either the smart contract or project level. This allows developers to modify code libraries from existing dApps to create new apps, reducing time spent on writing lines of code.

Types of Composability

Composability in blockchain technology exists in three forms: morphological, syntactic, and atomic. Here is a breakdown of each type:

  1. Morphological Composability: This type of composability refers to the ability to combine different components to create a new system. Morphological composability is the most common type of composability in blockchain technology. It allows developers to reuse existing code libraries from other applications to create new applications.
  2. Syntactic Composability: This type of composability refers to the ability to combine different components to create a new system with a different syntax. Syntactic composability is less common than morphological composability but is still an important aspect of composability in blockchain technology. It allows developers to create new applications with different syntaxes by combining existing code libraries.
  3. Atomic Composability: This type of composability is the combination of atomicity and composability. It involves a single transaction that involves calls to multiple smart contracts. Atomic composability is essential for creating complex contracts that can be used to create new applications or interact with existing ones.

Some real use cases and examples of composability on the Blockchain?

Composability on the blockchain has many real-world use cases and examples. Here are some of them:

  1. Decentralized Finance (DeFi): Composability is one of the central features of DeFi. It allows for the creation of complex contracts that can be used to create new applications or interact with existing ones. With DeFi, you may interact with protocols in countless ways and arrange your actions as if they were bricks of construction. Composability is what enables you to use Aave’s lending and borrowing protocol to exchange a DAI for an aDAI in Monolith and earn interest on it.
  2. Open Ecosystems: Enterprises or organizations can plug into open ecosystems and improve their efficiencies. Companies can launch tokens and let users employ them in the existing wallets. The composability feature acts as a binding element for the.
  3. Shortening Development Cycle: Composability in blockchain technology helps shorten the development cycle for decentralized applications (dApps). Previously, developers would have to develop every feature of an application from the ground up. But composability allows developers to modify code libraries from existing dApps to create new apps, reducing time spent on writing lines of code.
  4. Interoperability: Composability is necessary for creating an interoperable system where disparate elements can connect seamlessly. Components of blockchain technology, such as dApps, DEXs, and DAOs, are composable by nature, allowing them to be reassembled, duplicated, or integrated into one another. Blockchain composability typically occurs at either the smart contract or project level.
  5. Yield Farming: Yield farming is a process where users lend their cryptocurrencies to liquidity pools and earn interest on them. Composability allows developers to create new yield farming strategies by combining different protocols and smart contracts.
  6. NFTs as Collateral: Non-fungible tokens (NFTs) can be used as collateral for loans in DeFi. Composability allows developers to create new lending protocols that use NFTs as collateral.
  7. Flash Loans: Flash loans are a type of loan that allows users to borrow funds without collateral for a short period. Composability allows developers to create new flash loan protocols by combining different smart contracts.

How does composability differ from interoperability in blockchain technology?

Composability and interoperability are related concepts in blockchain technology, but they have distinct meanings and implications:

Composability:

  • Composability in blockchain refers to the capability of combining and interconnecting different blockchain protocols, smart contracts, and decentralized applications (dApps) to create new systems or outputs.
  • It allows developers to use existing building blocks to create entirely new applications without having to start over every time.
  • Developers can freely use and integrate code from other applications into their products because smart contracts, which control application logic, are open-source and available to the public.
  • Composability helps shorten the development cycle for decentralized applications (dApps) by allowing developers to modify code libraries from existing dApps to create new apps, reducing time spent on writing lines of code
  • Composability is necessary for creating an interoperable system where disparate elements can connect seamlessly.

Interoperability:

  • Interoperability in blockchain refers to the ease with which messages and assets (fungible or non-fungible) can be transferred across blockchains.
  • It implies seamless transfer of assets and messages between different blockchain networks.
  • Interoperability allows for the exchange of information and value between different blockchain platforms, enabling users to interact with multiple networks using a single interface
  • It enables the transfer of assets between different blockchain networks, allowing users to utilize the functionalities of different platforms
  • Interoperability is important for creating a connected ecosystem where different blockchains can communicate and collaborate with each other.

Benefits and Risks of Composability

The benefits of composability are clear: it allows developers to create new applications quickly and efficiently by reusing existing code. However, when two secure protocols work together, the combination can sometimes expose new vulnerabilities, and this new platform provides more room for possible attacks and may not be as secure as the platform it was built on complex limited knowledge of different possibilities can lead to excessive risk-taking. It is crucial to fully understand each step taken and realize the consequences attached to each action.

In conclusion, composability on the blockchain has many real-world use cases and examples. It enables developers to create new applications quickly and efficiently by reusing existing code. Composability is necessary for creating an interoperable system where disparate elements can connect seamlessly. Decentralized finance (DeFi) is one of the most prominent examples of composability in action, but there are many other use cases that will likely emerge as the technology continues to evolve

References https://cryptoadventure.com/community/articles/what-is-blockchain-composability/

https://businesstechguides.co/why-composability-matters-for-web3

https://a16zcrypto.com/posts/article/how-composability-unlocks-crypto-and-everything-else/

https://www.axios.com/2023/06/02/composability-blockchains-lego

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