Composable Finance: The Universal Gateway for DeFi

Any Money | Any Chain | Anywhere

From the beginning, DeFi has been dedicated to financial freedom. While financial freedom and opportunity are certainly currently available through DeFi, a few key pieces of the original vision are unmet. First, DeFi is not accessible and appealing to all. Moreover, DeFi is too dependent on trusted or centralized infrastructure that expedites adoption at the expense of quality, transparency, efficiency, and security. The widespread use of DeFi can only occur once interoperability and UI/UX in the space are optimized, trustless solutions are in place across all chains, and the ecosystem can stop relying on non-transparent, centralized, and custodial solutions like FTX.

Today, there are a plethora of DeFi ecosystems and protocols that are well-funded and supported, such as Ethereum, Polkadot, Cosmos, and NEAR. These projects have grown by framing themselves as the key solution to bringing Web3 to fruition, a positioning that amassed them supporters in the form of communities and long-term investors for these projects. The builders and communities that have grown around these different ecosystems should not be underplayed, as they work best in synergy: learning, listening, and promoting the values of their audience and users. Thanks to these individuals and groups, we are progressing in developing a DeFi-enabled future. However, we are not on the same track that brought us together, to begin with: we have lost our path of being a “DeFi Community” and are instead maximalists of different ecosystems that often compete when they should collaborate.

❌ Ecosystem DeFi v.s. ✅ Holistic Cross-Ecosystem DeFi

Historically, change is driven not by improved results, but through improved experiences. To improve the DeFi experience, holistic cross-ecosystem DeFi is important. Key services across DeFi should be combined to build a global financial system capable of supporting billions of users and trillions in TVL. Users and developers should not be compelled to choose one ecosystem over the other, thereby limiting mass appeal. DeFi should ease the transition for the builders of previous versions of the internet, largely through improved interoperability and UI/UX.

Yet, ecosystem-specific DeFi is still largely the norm. Ecosystem centricity is dangerously similar to centralization. Even if the technology itself is fully decentralized, if the user is ultimately stuck (either because of the complexity of cross-chain transfers or because of the inability to move assets to different ecosystems), and can’t seamlessly and freely manage his assets across ecosystems, then a layer of centralization is added that is analogous to keeping users tied down to a single “asset-home” such as a CeFi bank. In short, we have shifted from users asking “What bank can I trust?” to “Which ecosystem can I trust?”.

Moreover, it is clear institutions, corporate partners, builders, and everyday users can greatly benefit from DeFi, but the adoption process is currently too complex and risky. If someone attempts to learn about DeFi today, the most easily-accessible information is Ethereum-based and often outdated. Thus, potential new users miss out on the remarkable progress within a variety of DeFi ecosystems.

To combat this and promote cross-ecosystem education and collaboration, we should take an all-hands-on-deck approach. We should all make our Web3 offerings as easy to navigate as Web2. DeFi should abstract away the complexity of our technology and terminology for our users and focus on how that technicality can become “invisible”, resulting in a seamless user experience. This process should of course uphold the non-custodial, trustless, and permissionless characteristics of the blockchain.

That’s why Composable is dedicated to seamless cross-ecosystem experiences to take DeFi back to its roots. Our mission is to enable borderless DeFi for those who desire and need it. Setting aside the existing borders and tribalism in the space, Composable returns to the foundations of DeFi through ultimate interoperability. As a result, users can focus on what they wish to accomplish, without busying themselves with the minutiae of navigation and transfers.

Inclusive DeFi x TradFi

Regarding another controversial issue, I believe DeFi is not set to replace TradFi/CeFi, but rather to augment it and expand its reach, transparency, and functionality. Unless something is completely broken, you don’t throw away all of the work and start from scratch but rather you improve the inefficiencies and vulnerabilities. I firmly believe we should take the same approach to DeFi x TradFi, and this vision should be clearly communicated to TradFi participants.

The financial service industry and its stakeholders could greatly enhance their offerings by implementing DeFi innovations. Some institutions have started to approach the technology in this way, attempting to resolve shortcomings in TradFi such as the fact that customers have little to no oversight or transparency into what is happening with their assets. Yet, many traditional banking institutions are wary that DeFi is a hostile takeover attempt, rather than a global improvement to the financial service industry with immense opportunities for users.

Codification v.s. Decentralization

In our work to build offerings catered to TradFi, Composable is building offerings to enhance the user experience and replace the need for trust in banking institutions or others with trust in code. To be clear, we believe there are aspects of financial systems that should not be decentralized, anonymous, or immutable. Certain interventions and regulations remain necessary to promote security and prevent harm.

We are thus driven by “code is law”; most contracts, especially those tied to assets, should be ‘codified’, transparently handled, and unconstrained without censorship or interference. This allows functions to run based on encoding rules that govern actions, secure value, and automate processes in a trustless, efficient, and affordable manner. Codifying contracts would enable TradFi institutions to focus on high-level functions while user assets are managed by code. Simultaneously, the user benefits, as their assets do not rely on trusting centralized institutions. Here, code enhances global financial systems, rather than replaces them. This improvement allows all participants, including institutions, to minimize risk while maximizing efficiency.

The Origin of DeFi from a Global Perspective

The early goal of DeFi was to create a novel decentralized banking system that is globally accessible, transparent, and free from censorship or counterparty risk. A key component of this is being permissionless, allowing anyone from anywhere regardless of socioeconomic status to participate, contribute, and utilize these services.

A question that leads many, like me, to DeFi is “how can a population have a fair shot at financial freedom if they cannot access basic financial services?” It is easy to get tunnel vision here; especially from a US perspective, many interpret crypto and DeFi as speculative or risky alternatives to a system that “mostly” works. Yet looking globally, crypto is increasingly prevalent in emerging markets, driven by concerns over the state of certain national economies.

Consider emerging economies that are often riddled with inflation, corruption, and dysfunctional infrastructure. Users are forced to trust financial institutions, as they control all access points for financial services. These markets also often lack a secure, stable currency. This is the main reason why the world needs DeFi. Hence our motto of “Any Money, Any Chain, Anywhere”: we want to give users global access to any currency; to utilize any service to earn, store, or grow their wealth; and to access financial opportunities such as lending, borrowing, and investing.

The Opportunity: the JIO effect of Crypto

The impact of accessing a widespread, global user base has yet to be discovered. Onboarding new users, including many from the vast ‘unbanked’ community, could have a revolutionary growth effect. I foresee the next billion users serviced by the next trillion in TVL provided with the next generation of cross-ecosystem financial services. Composable Finance is building this vision into a reality, generalizing both the technology and the potential for global users.

Image: REUTERS/Amit Dave

When this shift inevitably comes, the opportunity therein is unparalleled. A similar event was the smartphone revolution in India; In 2016, JIO provided millions with the opportunity to enter the internet age. This had an immense impact on service providers such as YouTube and Zomato, which were flooded with new users, and also turned JIO from a zero-customer company to one of the largest mobile operators in the world with over 400 million subscribers. Similarly, I foresee the introduction of a “global DeFi” will unlock the potential of many new business opportunities through unparalleled accessibility of financial services, markets, and assets.

Composable: the Universal Gateway to DeFi

I often come across many parties asking how to get started in DeFi. Many assume the universal onramp is a wallet, but I believe that mass adoption and stickiness of participants require infrastructure with a holistic suite of tools. This is what we are building at Composable, so that anyone, anywhere, can access any money and execute any function on any chain.

Until this becomes a reality, we have not cracked the true altruistic narrative of crypto that has underpinned the industry since its inception. In other words, until users can do what they want with their money without caring which chain they are on (i.e. having chains behave like 5G or 4% network providers), then we have not accomplished anything.

Composable’s tooling is finally unlocking this ultimate level of interoperability. Driven by our Cross-Chain Virtual Machine (XCVM), our offerings work to connect more and more blockchains and facilitate the transfer of an increasing number of currencies, ultimately working towards the goal of allowing any money to be transferred between any chains. Further, we are working to put UI/UX at the forefront of everything we create.

If we can successfully remove hurdles to DeFi participation by allowing users to seamlessly use any money on any chain, we can unlock mass appeal. As user appeal grows, so too will the pressure on various other projects and organizations to integrate/interface with dApps and crypto. The more mainstream opportunities for crypto use that there are, the more that user appeal will continue to grow, forming a positive feedback loop until DeFi achieves broad use.

Any Money, Any Chain, Anywhere

If Satoshi Nakamoto’s creation of Bitcoin marked the first step in realizing the ultimate vision of DeFi, then Composable’s plan to enable the use of any money on any chain is the next revolutionary step in realizing this vision. Capitalizing upon the contributions of every person and project involved along the way, Composable’s infrastructure aims to deliver a limitlessly interoperable and user-friendly DeFi industry. As a result, DeFi can appeal to all, incentivizing organizations and institutions to integrate with crypto to meet user demands.

Once any money can be used on any chain and mass adoption can resultantly occur, DeFi can deliver upon its ultimate mission of financial freedom for all.

Important Legal Disclosures & Disclaimers: https://www.composable.finance/disclaimer