Financial product composability describes the ability to combine various financial products or protocols like building blocks to create new, more complex financial instruments or services. This property allows for modular design and the recombination of existing components. It promotes innovation and customization within financial markets. Such modularity can lead to novel financial applications.
Context
Within decentralized finance (DeFi), financial product composability is a defining characteristic, often termed “money legos.” Smart contracts enable users to link different protocols, such as lending platforms with liquidity pools, to construct sophisticated strategies. News frequently covers new DeFi protocols that leverage composability to offer innovative yield generation or risk management solutions, albeit with associated systemic risks.
Tokenizing Treasury shares on-chain shifts the MMF settlement layer from T+2 to T+0, enhancing institutional capital efficiency and liquidity mobility.
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