Composability vs. Interoperability

tl;dr: the Layer 1s that don’t break atomic composability will have a competitive advantage.?Why AC matters.

Back during my consulting time with?Dapper Labs, the inventors of?Crypto Kitties?and the NFT boom, I was working with them on the early stages of the?Flow blockchain.

The obvious question was: why would the company that had invented NFTs on Ethereum and had done so well because of them want to change course and create their own blockchain?

I soon learned the answer: Atomic Composability.

I distinctly remember them saying that “Atomic Composability” is the superpower of crypto and when you shard a blockchain, as Ethereum plans to do, you break it.

I gave that statement a lot of credence as I continued along in my crypto journey.

In fact, it was the statement by the Radix team that the protocol could scale infinitely?without?breaking atomic composability that got me intrigued in the very early days.

So What is Atomic Composability and Why Does it Matter?

I was reading an article,?Composability in the Context of Defi, that helped me renew my thought processes about this critical element to DeFi.

The first point it made was to clarify the often-confused terms of “Interoperability” and “Composability”

“Interoperability” is when two things can talk to each other.

Your Nest thermostat can “talk” to your Wi-Fi router. Your Venmo/Paypal account can “talk” to your bank.

Atomic Composability means that you can take ANY aspect of one of those and make it a core feature of the other one…without asking for permission.

So, imagine if all of your friends in Venmo were a native feature of your bank account? Or vice versa…what if you could pay your electric bill via Venmo.

With Atomic Composability, a developer could do this…without asking for permission from Venmo or your bank…and presto, you have a new, more robust application.

Atomic Composability as the Superpower

This is the part of Web3 that’s difficult to imagine because it’s one of the things that was literally impossible before the arrival of decentralized networks.

Consequentially, there’s nothing really to point to (aside from the oft-used metaphor of legos), which can serve as an example of “any piece can literally connect to any piece” and that results in millions/billions of possible outcomes.”

But the next evolution of dApps (at least on the Layer 1s that enable it) will make this possible.

The result is that we’ll have new financial applications that today, we can’t even imagine.

It’s difficult to imagine what will happen when the impossible becomes possible.

30 years ago, no one would have imagined Netflix, WhatsApp, or YouTube…they were all impossible.

Composability does for finance what broadband did for information.