DeFi growth and Composability

Though the introduction of new blockchain networks and decentralized applications are a critical part of the broader adoption of DeFi and WEB3, they have collectively crippled the DeFi composability due to inefficiencies introduced in the primitive at the core of WEB3 adoption – Assets/ Tokens

The key adoption challenges introduced by these stakeholders are;

Wrapped Assets across blockchains break composability

Introduction of wrapped assets that are non-fungible with the assets on the native chain

• ETH on Ethereum ≠ ETH on Binance Smart Chain ≠ ETH on Avalanche

Wrapped Assets by Interoperability Solutions/ Bridges break composability

Deployment of wrapped assets by different bridging solutions that are non-fungible on the same chain. Each decentralized application has chosen to deploy assets provided by different bridging solutions

• BTC on Ethereum by WBTC ≠ BTC on Ethereum by Binance ≠ BTC on Ethereum by Ren

Deployment of wrapped assets by same bridging solutions that are non-fungible with the same native asset on another chain

• ETH on BSC by Multichain ≠ ETH on Moonriver by Multichain ≠ ETH on Avalanche by Multichain

Choice of wrapped assets by dApps breaks composability

Support of wrapped assets that are non-fungible on the same blockchain (2. a.)

Instead of focusing on transmitting information securely, each solution (blockchain/Bridge/dApp) has chosen to create its own liquidity solution on the application layer causing “liquidity walls''. In addition to liquidity walls, this approach has also fractured the direct communication channel between smart contracts.

Imagine connecting to the Internet through “proxy servers”, the functionality of cross-chain smart contracts is greatly limited by these “proxy servers”.