Blockchain Base Layers & The Need For DeFi Adoption

The blockchain space has seen considerable adoption in the past few years, thanks in no small part to the facets of cryptocurrencies and digital assets available. Recently, the market was open to the decentralized finance (DeFi) space - a new sub-industry where traditional finance operations can be carried out via decentralized networks and with zero intermediaries.

While DeFi has been a revolution, it has also faced the same adoption issue as traditional crypto. Sure, it’s easy to blame the lack of regulatory clarity in the industry and the fact that many investors still don’t feel overly comfortable transacting with crypto. However, several other underlying factors have also hindered this.

One such issue is the seemingly constant operational challenges with blockchains themselves. As many know, the increased adoption of blockchain technology has left many blockchains with scalability issues. And, left with no way to grow or scale, blockchains are now faced with declining user numbers across the board.

It is as apparent as it can get - for the industry to really grow, blockchains need to be better and more effective. And, fortunately, there are several platforms that see a world where blockchains can truly be multifunctional.

This is where Composable Finance comes in. The service operates as a central hub that allows the movement and transaction of money anywhere. With a focus on optimizing efficiency, Composable Finance offers an ecosystem for cross-chain financial operations, smart contract functionality, and much more.

In this interview, we spoke to 0xbrainjar - the founder and chief executive of Composable Finance - about their vision for the platform going forward.

1. What are the issues that Composable Finance is looking to solve?

At Composable, we recognize the current challenges in the blockchain space, particularly in the area of cross-chain interoperability. The main challenge we are currently looking to solve is the lack of a common interoperability standard between blockchains within different ecosystems. We aim to eliminate the borders between different blockchains and ecosystems by using the Inter-Blockchain Communication (IBC) protocol, the most trust-minimized transport protocol out there. We have developed Centauri, our extension of IBC, to enable seamless and secure transfer of assets and functions across chains. Through these different Centauri connections, we are removing trade-offs between asset security and cross-ecosystem opportunities. We ultimately envision a landscape where any money can be used on any chain, anywhere.

2. Do you believe that cross-chain functionality is key to the adoption of DeFi?

Absolutely. As blockchain technology evolves and more chains and ecosystems are introduced, the need for interoperability becomes increasingly critical. Currently, users and developers are siloed within their chosen blockchain ecosystems, limiting their access to liquidity, opportunities, and functionalities. Cross-chain and ecosystem functionality, via Centauri, breaks down these barriers, allowing for seamless interactions across multiple blockchains. In order for this to happen we believe that the user experience needs to become so seamless that users don’t even need to concern themselves with what chain they’re interacting with. When cross-chain functionality reaches its full potential you won’t even realize you’re interacting with multiple chains. It's this level of abstraction and flexibility that will drive the widespread adoption of DeFi.

3. Are there potential pitfalls to a cross-chain future?

A cross-ecosystem future is inevitable at this point, but yes there are challenges we have identified and are looking to solve. Namely, custodial or multi-sig (trusted) solutions dominate the bridging landscape today which leaves users with lackluster options when it comes to moving tokens between chains. Right now the cross-chain landscape is wrought with insecure, time consuming, and hard to use interfaces. This is how Centauri is different - it provides a holistic solution and seamless that empowers the user rather than exploits them. Additionally, user experience is also a challenging factor. While cross-chain functionality provides increased opportunities, it can also create complexities for users unfamiliar with interacting across multiple chains. At Composable, we are committed to navigating these potential challenges and are continuously working on innovative solutions to minimize complexities.

4. How do you believe DeFi can be better integrated into our current financial system?

The decentralized evolution must echo the path carved out by successful traditional finance (TradFi) platforms, like Robinhood, that have managed to achieve prominence by delivering a seamless experience while integrating various markets. Likewise, for DeFi to make substantial strides forward, it must aspire to create an equally seamless and integrated environment. Blockchain ecosystems, akin to markets in traditional finance, cannot function effectively in silos. Interconnection is vital, allowing for unimpeded cross-communication and interaction. On the user experience front, in a world where DeFi gains widespread acceptance, users shouldn't have to grapple with toggling between wallets or discerning which chain they are interacting with. The grand vision is to architect a Web2-like experience on top of a trustless, non-custodial infrastructure. In this envisioned future, the barriers to user interaction are brought down, promoting ease-of-use while still preserving the core principles of decentralization. In essence, this is the guiding philosophy behind Composable Finance's mission. The slogan "any money, any chain, anywhere" is not just a catchphrase; it's a commitment to make DeFi as accessible and user-friendly as possible while maintaining its foundational ethos of decentralization.

Conclusion

As the DeFi market continues to grow, there is a significant feeling that we will continue to see more adoption. But, the space can’t really fulfill its potential if blockchain interoperability isn’t secure and borderless.

This is one of the challenges that we currently face, and it is important for platforms like Composable and Picasso to look towards solving them. Now, it’s a matter of when the bright new future of the industry will come.