Definition ∞ An economic primitive is a fundamental building block or basic function within an economic system, especially in decentralized finance. In blockchain, these are simple, self-contained smart contracts or protocols that perform a single, core financial operation, such as lending, borrowing, or exchanging assets. These primitives can be combined in various ways to construct more complex financial applications, leveraging their inherent interoperability. Their reliability and security are crucial for the stability of the larger DeFi ecosystem.
Context ∞ News about DeFi innovation frequently references economic primitives, explaining how new protocols are constructed by combining these basic functions. The development of robust and composable primitives is seen as vital for the continued expansion and stability of decentralized financial services, allowing for permissionless innovation and the creation of novel financial instruments.
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