Composability
The way DeFi protocols snap together like building blocks, so the output of one can plug straight into another.
Composability is the idea that on-chain apps interoperate by default. Because they share a public blockchain and open code, one protocol can call another mid-transaction. Deposit in a lender, take the receipt token, supply it to a pool, stake that, and each step feeds the next. People call it money Legos.
This is what lets DeFi move so fast, since builders reuse existing pieces instead of starting from scratch. It also chains the risks together. A flaw or depeg in one widely used protocol can cascade through everything built on top of it, as several 2022 failures showed.
Related terms
Financial services run by code on public blockchains, letting people trade or borrow without a bank.
Smart ContractSelf-executing code on a blockchain that runs exactly as written when its conditions are met, with no party able to intervene.
Liquid StakingStaking tokens while receiving a tradable receipt token, so your capital keeps earning rewards without being locked up.
DApp (Decentralized Application)An application whose backend logic runs on a blockchain through smart contracts rather than a company's private servers.