Back to: Smart Contracts for Beginners
Composability means contracts call each other: a vault deposits into a lending pool that prices via a DEX oracle. One user action can ripple through five protocols in a single transaction — atomic, so it all succeeds or all reverts together.
The standard stack (bottom to top)
1. Assets (ERC-20s, ETH, stables) — the raw material. 2. DEXs/AMMs — price discovery + swapping. 3. Lending pools — interest + leverage, priced by oracles. 4. Vaults/aggregators (Yearn-style) — automated strategies across 1–3. 5. Front ends — the website you click, which is *not* the protocol (the contracts work identically without it).
Why composability multiplies both innovation and risk
– Innovation: a new product launches by wiring existing contracts — days, not years; no partnerships needed. – Risk: every dependency is a failure point you inherit. Oracle wrong? Lending pool below drains. Base DEX exploited? Everything stacked on its prices follows. The 2022 collapses were composability cascades wearing different logos.
Reading a protocol's dependencies (5 minutes)
List what it calls: which DEX for prices, which oracle, which bridge for cross-chain assets, who holds upgrade keys. That list *is* its risk profile — a protocol is only as trustless as its most trusted dependency.
Money Legos snap together beautifully and transmit cracks perfectly. Build
> on audited bases, and know exactly which bricks you’re standing on.
Next lesson: when contracts fail — famous hacks as case studies.