All terms
Protocols snapping together like building blocks, because they are all public.
Because smart contracts are public and permissionless, any contract can call any other. A new protocol can build on an existing exchange, lending market and oracle without asking permission or signing an agreement.
This is sometimes called money legos, and it is a genuine structural advantage over traditional finance where every integration is a negotiation. It also means risk compounds: a flaw in one widely used building block propagates to everything stacked on it.
A yield product might deposit into a lending market, use the receipt as collateral elsewhere, and hedge on a third protocol, all in one transaction.
That composability is free upside. Every protocol you build on is a dependency, so its bug, its oracle and its governance become yours. The same property that lets things snap together lets a failure travel.
Common questions
Why is composability a big deal?
What is the risk?
Where to go next
More web3 terms
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