Thread by @GoolagCrypto

🧵On composability and its value in DeFi for @scribeDAO

TL:DR; Composability allows for the integration of multiple protocols into increasingly innovative and complex products

I noticed a lot of people throw the word composability around a lot, and non-crypto natives probably don't know what that means and why its important especially considering the rise of L2s

I'll try my best to explain the issue in the next few tweets

1⃣ What is composability?

The capability for applications and protocols to leverage each others code in a permissionless manner creating synergistic effects

Essentially one can pick and choose DeFi apps to amalgamate forming brand new financial products

i.e "Money Legos"

2⃣ An example?

Consider Alchemix

ALCX allows users to place capital into Yearn to earn yield, take a loan out on that capital, and use the yield earned to pay off the principal + interest of the loan

To accomplish this ACLX leverages YFI which leverages COMP and so forth

3⃣ What does this have to do with L2s?

Composability is essential in the creation of new and increasingly innovative/complex financial products like ALCX

In L2s there is still a limited concept of cross-layer communication and interaction making composability impossible

4⃣ Conclusion

In order for the DeFi ecosystem to continue to thrive, develop, and scale alongside L1s composability needs to be present and solved for in L2s

There are a plethora of people working on the problem and soon enough we might see a solution!