What is Composability?
Composability is DeFi's "money legos" property. Protocols can be combined and built upon each other, creating new financial products.
Examples
- Use stETH (Lido) as collateral on Aave
- Deposit LP tokens in yield optimizers
- Flash loans enabling complex arbitrage
Benefits
- Rapid innovation
- Capital efficiency
- New strategies from combinations
Risks
Composability creates dependency chains. A failure in one protocol can cascade.