Compounding Utility Through Composability

Smart contract platform utility is predicated on a robust open-source development environment and widely available shared infrastructure. Developer tools make it easier to create new applications by borrowing existing infrastructure and design elements, lowering the barriers to development and expanding the number of use cases that can be addressed via non-custodial, blockchain-based applications.

Shared token standards (e.g. ERC-20 and ERC-721 for Ethereum, EOSIO for EOS, etc.) drove most of the initial development on smart contract platforms. They made it “easier to create consistent experiences across multiple products and use cases,” and touted the concept of ”token economics” - the concept that exuberance for ICOs could be justified as these new platforms came with attached incentives. Of course, most applications failed to drive user adoption, some due to a poorly defined or unrealistic product strategy, others hampered by an inadequate surrounding development environment.

Recent developments have introduced new standards and complementary protocols that facilitate the creation of non-custodial consumer applications. These primitives provide the necessary infrastructure, such as token liquidity or price stability, to create more intuitive crypto-enabled products.

These foundational elements act as building blocks for the next generation of applications and mark a platform’s level of “composability.”

Composability increases the rate of software innovation “because developers can use each others’ code like lego blocks” and tap into existing user bases. The rapid creation of new protocols and applications also has a compounding effect on a network’s utility. With any luck, these experiments will ultimately attract new users, who use new applications and drive a higher total level of volume through underlying services and the network as a whole.

Breaking down the composability stack