Money Legos
Tue, Apr 15Money Legos, or DeFi Legos, refers to the concept of composability, which involves combining simple protocols that excel individually into a new protocol or service.
Lego blocks, representing individual protocols on the same blockchain network, can "snap" onto one another, leading to the creation of innovative DeFi projects.
The protocols can interoperate, or collaborate, through middleware that connects the various protocols together.
Notable examples of this concept include Automatic Market Maker (AMM) protocols, liquidity mining, over-collateralized loans, and flash loans.
DeFi protocols that benefit from DeFi Legos include Maker DAO, Aave, Synthetix, Curve, Yearn, Compound, Sushi, and Polygon.
Many DeFi Lego protocols are built on the Ethereum blockchain, which holds the largest share of total value locked in DeFi applications.
However, this does not mean that protocols outside of Ethereum cannot take advantage of the DeFi Legos concept.
A prime example is the Hubble Protocol, which operates on Solana and offers USDH, a crypto-backed and censorship-resistant stablecoin.
Similar to Maker DAO, Hubble allows users to deposit digital assets and borrow a stablecoin for use in DeFi, enabling them to maintain their long positions on the asset while gaining liquidity that can also be utilized.
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