Composable Finance: Real World Solutions for DeFi

Composable Finance is working on a suite of different products to reduce the barriers for DeFi developers on popular blockchains.
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Composable Finance is a project backed by he publicly traded German-based blockchain organization Advanced Blockchain AG. In late 2020 it began development as a cross-chain and cross-layer interoperability platform.

It also offers a hyper-liquidity infrastructure layer powered by Layer 2 of Ethereum and Polkadot protocols for DeFi assets.

Composable Finance is working on a suite of different products to launch cross-chain and cross-layer interoperability that is going to not only reduce the barriers for DeFi developers but also remove the unnecessary complexity for the users.

The Evolution of Blockchain Created Composable Finance

Bitcoin was the first one built for a decentralized and peer-to-peer digital asset due to its unique economic security model that is borderless and censorship-resistant. Then, Ethereum appeared to bring much flexibility and extensibility to the space by a programmable blockchain that can run decentralized applications.

When the platforms like Bitcoin and Ethereum have been more and more raising their interest and attention, the limitation started appearing then sparking a debate around scalability issues.

Blockchain technology has developed with the key value proposition of decentralization, which is the ability for networks to be owned and run by millions of stakeholders rather than the conventional corporate models of governance.

However, when the number of blockchain networks continues to grow, most of them remain cut off from each other. Like islands with their own communities and economies, they cannot exchange information or value with the outside world.

The lack of interaction between blockchain networks not only limits decentralization but also prevents the advancement and relevance of the technology. When applications are designed for one network, they only can work within that network, therefore, that limits their potential for broader adoption.

Several projects have been developed to address these issues by building bridges between networks since it will allow applications to build on each other’s services and strengths.

As a result, Decentralized Finance (DeFi) can get benefits from increased liquidity and the ability to build a network of services that connects across communities leading to their user increase and the expansion of the available resources.

One of the problems to be addressed is the lack of cross-layer (L2/L2) Interoperability. At the present, no protocol facilitates moving between different L2 applications.

Moving between L2 applications requires users to move back to the L1 chain first, which is highly insufficient due to long lockup periods, taking a few weeks, and a lot of fragmentation.

This lack of cross-layer (L2/L2) interoperability makes applications on one L2 network can’t communicate with the applications on another L2 network, therefore, infrastructures are siloed and complexity increased.

Composable Finance Takes the Lead

Composable’s CEO Cosmin Grigore has a bold vision for the future of DeFi. He has been a Lead Blockchain Developer, and sees opportunities ahead.

While building dApps on the Ethereum blockchain, he noticed there was a lack of interoperability between multiple blockchains and layers creating fragmentation and disparity across the DeFi ecosystem.

That restricted development and forced users of these dApps to navigate complicated and lengthy processes if they wanted to utilize multiple chains or layers.

The CEO partnered with the Head of Project to develop an ecosystem including a suite of different products to allow cross-chain and cross-layer interoperability, aiming to help DeFi developers reduce the barriers and remove the unnecessary complexity for the users.

The development of Composable has two phases. The first phase is focused on multi-layer (L2/L2) interoperability to bridge the gap between different Ethereum Layer 2 implementations and sidechains.

The second phase is the launch of its own Picasso parachain on Kusama, which has been developed over several months to pave the way for a complete DeFi ecosystem on Polkadot.

Picasso has been designed to be maximally useful to build along for DeFi developers. It is optimized for innovation, construction, maintenance, symbiosis in decentralized financial tools.

Users are able to create pallets for Picasso. These pallets will serve as the building blocks on the parachain and be developed for all DeFi primitives as well as having more advanced functionalities.

Developers can make pallets in the Primitives, Core, or Application tracks. DeFi primitives are the necessary powering the industry and include transaction execution, oracles, smart contracts, tokens, keepers, and governance.

Addressing the Core Issues

Core components of DeFi build on primitives to create key value-generating processes, such as lending. Application functions are more advanced and incorporate core and primitive components to generate sophisticated financial tools, like yield aggregators.

In short, the combination of a full suite of pallets will give developers built-in, highly customizable tools, allowing them to construct powerful, interoperable dApps.

In addition, once cross-chain message passing goes live, the currently supported pallets can be phased out, instead, users can choose communication with pallets on other parachains, spun out into parachains themselves, or altered in design.

New Technology – New Opportunities

Composable’s primary focus was on technology. The team is well known among crypto VC firms that assisted Composable with strategic advice and investment. One of the significant projects building on Picasso is an isolated lending pair pallet, called Angular Finance.

Designed to isolate risk, this pallet is set to open new opportunities for use cases such as leverage on interest-bearing assets and serves as a lending protocol for leveraged trading, options, and derivatives.

Another project is the Audited Platform.

The Composable Finance coding has been audited by the near decade-old cybersecurity auditing firm Trail of Bits. Trail of Bits had reviewed the code and made suggestions on addressing any points of weakness, which were implemented.

Composable aims to build a cult-like following in terms of awareness and community and is one of the first to work in both the ETH and Polkadot ecosystems and wants to bring them togherer.

The name Composable was chosen for a reason. It also represents the type of technology the team is building, as well as the community who are sometimes referred to as “Composers.”

The Picasso (PICA) Network Token

Composable releases the Picasso Network token (PICA), which is the native token of the Picasso parachain and lives solely on the Kusama parachain.

PICA will have functionalities including allowing voting on which pallets are implemented first on Picasso beside the other available core pallets such as Apollo (oracle pallet) and Cubic (vaults pallet).

The total Picasso token supply will be 10,000,000,000 and will be distributed as follows:

  • Liquidity Mining 30%
  • Crowdloan Stakers 20%
  • Team 15%
  • Treasury & Pallet Grants 15%
  • LAYR Stakers 10%
  • Protocol Emissions 10%

Composable Finance is Building the Future of DeFi

The DeFi industry is currently disjointed and disparate since interoperability solutions for cross-network communication and value transfer are inefficient and few and far between.

Unlike other companies which are exploring solutions to this problem, Composable provides the unique, all-encompassing solution of Composable.js to create a new layer that sits on top of existing chains.

Composable’s parachain allows the team to bring a full-scale, completely interoperable ecosystem to the Polkadot Network.

The unique value of Composable is not only to simply supply a piece of DeFi’s interoperability solution, but also to develop an entire ecosystem where developers can build DeFi offerings and end-users can enjoy a seamless experience.

Composable incorporates the larger DeFi industry into the project to break down the “ecosystem-as-a-service” model.

The team has developed the Composable Grants Program to allow teams and individuals to be able to apply for funding for developing cross-layer applications and pallets for the Kusama parachain, Picasso, which is to reach a broader understanding and use would be helpful for companies.

In addition, those who are chosen for the grant program will be introduced to key investors at certain stages of product development to receive support from the diverse team to help overcome any development barriers as well as assistance with marketing their project.

To date, Composable has partnered with the leaders in blockchain protocol such as Advanced Blockchain AG, Angular Finance, Polygon, Arbitrum, KYVE, and Kusama aiming to push forward with the company’s vision for building a fully interoperable DeFi ecosystem.

To learn more about Composable, you can visit its website by clicking here. It also publishes its ideas and updates on Medium!

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Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.

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