In this article, you will learn how can you define composability. Even if you are from, you may have heard the terms like Bitcoin, cryptocurrency and blockchain, but terms like smart contracts are less known to crypto enthusiasts. Smart contracts are the innovation of Ethereum. Smart contracts are programs that anyone can write and deploy to a public blockchain, enabling all kinds of innovation. Composability is one of the abilities of smart contracts.
How Can You Define Composability?
Composability is a software development concept describing the ability to combine components to create products and systems. Like legos stacked on top of each other to create new things from existing building blocks, software elements stack on top of each other to create new applications.
Composability allows developers to use existing building blocks to create entirely new applications without having to start over every time. Like scientists build on top of each other's work without needing to go back to basics for every study, developers use each product other's work to build .
Smart contracts go beyond simply allowing for instant and verifiable transactions for various applications though — they can also be programmed to interact with each other. In other words, they make crypto programs composable, like building blocks. Because composability allows anyone to take in a net Existing programs and adapt or build on top of them, it unlocks completely new use cases that don't exist in our world.
Why is Composability Possible?
The ability for anyone in a vast network of disconnected, distributed participants to leverage the work of others to create new applications didn't just arise spontaneously — it required the cooperation of many people.
Ethereum smart contract developers enabled composability over time by converging on community standards that describe how certain types of contracts should behave. For example, the ERC-20 token standard, first proposed by developer Fabian Vogelsteller in November 2015 incr10 and formalize. Ethereum tokens should behave, including basic functionality like the transfer of tokens and approval for spending tokens. It allows third-party developers to easily support any token that complies with the ERC-20 standard.
This type of standardization is crucial to composability, just as standardizing internet and email and other protocols were crucial to the growth of the web. With these token standards in place, smart contracts can act as building blocks that are able to be assembled into larger systems .
How Does Composability Work in Decentralized Finance?
Financial positions in DeFi protocols — which enable users to loan, borrow, trade, or otherwise transact without requiring centralized financial institutions in the middle — can be represented as ERC-20 tokens that can be redeemed for the underlying funds.
For example, if you deposit USDC (tokenized US dollar) to the lending protocol Compound, you receive cUSDC, which represents your position that's earning interest within Compound. Similarly, when you deposit funds into the decentralized exchange protocol Uniswap to provide liquidity to a specific market, you receive ERC-20 tokens that represent your share of the funds pooled within the associated Uniswap market.
Bottom Line
Composability leads inevitably toward more choice, and better user experiences, because there are no obstacles to someone taking an existing idea and making it easier to use, or adapting it to new use cases. So, this article is about how can you define composability.
