Composable money is like financial building blocks
Composability is a major value prop for Open Money systems
Open, permissionless money isn’t just a new way to transact — it’s a new way to build. Instead of rigid, siloed financial products, blockchain-based finance is modular, dynamic, and interoperable, much like Lego bricks that can be stacked, reshaped, and repurposed.
This is the power of composability.
In traditional finance, creating a new service often means starting from scratch — redesigning infrastructure, navigating compliance hurdles, and integrating with legacy systems.
In crypto and DeFi, composability flips this paradigm. Smart contracts and protocols can be layered, combined, and extended to create new financial instruments without the need for gatekeepers or redundant groundwork.
why composability matters
- Access: Entrepreneurs no longer need vast capital to build financial products. They can leverage existing networks, iterate quickly, and create new services at a fraction of the traditional cost.
This democratization of finance levels the playing field, enabling a global wave of innovation. Builders from emerging economies can tap into financial networks previously out of reach, fostering a more inclusive financial ecosystem. - Standards as building codes: The Ethereum ecosystem already benefits from token standards (ERC-20, ERC-721), and as more protocols develop common frameworks, the range of what can be built expands exponentially.
As standardization increases, composability will unlock even greater efficiency and usability. Future developments in decentralized identity (DID) standards and cross-chain interoperability will further enhance blockchain’s ability to function as a seamless ecosystem. - Global reach: Composable finance enables seamless money movement, allowing individuals and businesses to interact across borders without intermediaries slowing the process.
Traditional cross-border transactions involve complex clearinghouses and banks; composability simplifies these interactions into a frictionless, borderless experience. The remittance industry, currently dominated by high fees and slow processing times, could be completely transformed.
Real-world applications
Composability is not just theoretical — it’s already reshaping DeFi:
Yield farming & liquid staking: Assets can be staked in one protocol while being leveraged in another, optimizing capital efficiency. This interconnectivity enables better yield opportunities for users and allows investors to maximize returns while maintaining liquidity.
Tokenization: Real-world assets are being fractionalized, opening new investment opportunities for a broader audience. Imagine owning a fraction of a high-value asset like real estate or fine art, seamlessly tradable through blockchain-based smart contracts.
Tokenized assets could also improve supply chain finance, allowing businesses to use their inventory or invoices as collateral for decentralized lending.
Decentralized exchanges & swaps: Liquidity pools allow seamless asset trading without centralized control. The ability to swap assets instantly without a middleman reduces costs and increases accessibility.
With advancements in automated market makers (AMMs) and cross-chain bridges, decentralized finance will become even more fluid and user-friendly.
NFT interoperability: The ability to transfer digital assets across games and platforms enables new digital economies. In the gaming industry, interoperable NFTs could revolutionize in-game ownership and digital asset management.
Imagine a virtual sword earned in one game being used in another, creating a player-driven economy across multiple digital worlds.
Decentralized collaboration: DAOs introduce a novel model for governance and collective decision-making. These organizations, powered by composability, allow for borderless cooperation, where voting and treasury management happen transparently on-chain.
DAOs are already being used to manage investment funds, run social communities, and govern decentralized projects with global participation.
The future: programmable money at scale
Composability isn’t unique to blockchain—it’s a principle that has driven open-source software and modular design for decades. But in finance, it is revolutionary.
As programmable money matures, its modular nature will lead to faster innovation, reduced costs, and an entirely new paradigm for economic coordination.
Imagine a world where financial tools evolve as quickly as software, where lending, borrowing, investing, and transacting can be tailored instantly to fit any need. This is the promise of composability—a world where financial systems are no longer rigid structures, but fluid, adaptable networks.
The rise of cross-chain technology and layer-2 scaling solutions will further amplify composability, enabling blockchains to interact seamlessly. DeFi applications will become more sophisticated, combining multiple financial primitives into complex, automated systems that rival traditional banks in functionality while maintaining decentralization.
The future of money isn’t a monolithic structure—it’s a stackable, ever-evolving system where the best ideas can be built upon, iterated, and reassembled into something greater.
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Daniel McGlynn
Daniel McGlynn
Daniel McGlynn
Daniel McGlynn