Interoperability and Composability within Ethereum

Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji)Editor's Note: This article comes from

Blue Fox Notes (ID: lanhubiji)

Blue Fox Notes (ID: lanhubiji)

Foreword: Protocols and applications within Ethereum can be combined to create something new that never existed before. This way is called "Lego" mode by many people. This means that there are more possibilities. Of course, it is impossible for all combined innovations to be popular. There are always more failures than successes. However, the hidden possibilities here allow us to see the future of open finance, a finance that does not require permission and trust The platform can realize almost all functions of traditional finance. The power here is boundless, and a window to the future of finance has been opened. The author of this article is "LindaXie", translated by "SL", the author of the "Blue Fox Notes" community.

As the most famous smart contract platform, one of the unique advantages of Ethereum is the interoperability and composability between multiple different protocols and applications. That’s not to say other smart contract platforms can’t achieve this, but it will take a long time to build a robust protocol with network effects involving liquidity, usage, developers, community, and infrastructure.

If you want to build on areas involving high-value transfers, such as DeFi, then, for protocols and applications, you need to spend time conducting actual combat tests to reduce the probability of bugs. Note, however, that this doesn't mean they're completely error-free after a while. Ethereum smart contracts have and will continue to have bugs, so it is important to exercise caution when interacting with them.

interesting possibilityWhat are non-fungible tokens?Within Ethereum, protocols and applications can easily plug into each other and combine to create something entirely new. This is sometimes called "Lego bricks" in the community. This is a brand new concept unprecedented in the traditional world, not just copying existing products in a decentralized way.

An added bonus is that you can start and bootstrap projects and communities this way. For example, if you want to create non-homogeneous tokens (NFT, please refer to the previous article "

What are non-fungible tokens?

》), such as props in the game, then you can immediately trade them through the decentralized exchange protocol.

For example, you can combine DeFi and games. By adding DeFi to games, we can better understand incentives and markets, and by adding games to DeFi, we can make finance more accessible to different audiences. Communities that normally don't interact with each other start talking and sharing ideas, which could lead to more innovation. For inspiration, Brian Flynn shared his concept of combining Pac-Man and the stablecoin DAI. (Blue Fox Note: PAC-MAN is a Pac-Man game)

Regarding composability, you can also see creativity in hackathon developers. At the ETHBoston hackathon in September 2019, there was a project called SwanDAI, which is a synthetic asset created using UMA, a platform that allows the creation of synthetic assets.

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(Cheeze of Insight's prediction market combines Cheeze Wizards, Augur, and 0x)

(concept of 2100)

risk

Projects like PoolTogether combine lotteries and DeFi. People buy lottery tickets, and all the funds for buying tickets earn interest through DeFi's Compound protocol. At the end of the lottery, everyone gets their ticket back, but one lucky person gets interest on all the lottery pool money, it's a "no loss" lottery (unless you take into account smart contracts possible risks and the opportunity cost of directly earning interest on capital yourself).

What I want to emphasize is that by combining different protocols and applications, this increases the risk of smart contracts. If a protocol has a major smart contract bug, then it can bring down the entire system. This is why it is important to be cautious about placing too much money on any of these systems.

epilogue

Ultimately, when the field becomes large enough, I believe centralized insurance companies will offer insurance products related to smart contracts, and they will use smart contract auditors to evaluate the code. This is similar to how some asset custodians and exchanges insure the cryptocurrencies they store.

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