As the decentralized finance (DeFi) market has matured and grown in popularity, the term “atomic composability” has continued to seep into the vernacular of many crypto enthusiasts. Sometimes used interchangeably with words such as “inter-fragment composability”, “synchronous composability”, and “inter-fragment atomicity”, it is a complex concept that requires detailed explanation.
To begin with, we can see that one of the most striking aspects of the DeFi market is the interoperability present between its various dApps and digital assets. This ability to interact is what we commonly call “composability”. The power to compose a single transaction while using different stand-alone smart contracts has enabled developers to innovate and create services that would otherwise not be possible within the framework of traditional finance (trad-fi).
For example, developers can create products capable of providing real-time exchange rates on different automated market makers (AMMs) or harness the power of outsourced liquidity pools to benefit from arbitrage opportunities, all thanks to the power of composability.
In order for all the operations mentioned above to be transparent and trouble-free, they must occur simultaneously through a single “atomic step”. In other words, the entire transaction lifecycle – across all the smart contracts involved – must be validated and resolved in one process (otherwise they should fail in unison) so that there is no has no possibility of safety failure/failure. .
Atomic Composability Matters
Atomicity is an essential foundational foundation for the DeFi sector, especially when it comes to addressing the inefficiencies that plague today’s trad-fi systems. However, despite its obvious importance, most blockchains have sought to increase their scalability output by ignoring composability. This has usually been done by separating applications and transactions using “shards”, i.e. tools that speed up operations but do not have direct, atomic access to each other.
As more and more shards are introduced into an ecosystem, there is an apparent reduction in interoperability and an increased conflict between the scalability and composability of a blockchain, making true decentralization difficult to achieve. Base is a platform that has tackled and tackled this problem head-on using its new consensus mechanism called ‘Cerberus.’ It uses two unique key functional modules that set it apart from its peers while allowing it to achieve unlimited scalability without compromising composability.
To start, Cerberus uses a type of sharding where instead of dividing dApps and assets between a static set of shards, it deploys a virtually infinite set of shards where all network components are dynamically distributed, parallel to each other. . Additionally, Cerberus eliminates all barriers between its shards using a new consensus design in which each shard is able to reach consensus independently.
Radix achieves this by “braiding” these consensus processes into one, which results in completely streamlined, frictionless composability, and none of the limitations that typically come with low scalability.
Composability is a game-changer in more ways than one
Some of the most powerful aspects of composability come to life when considering some of its real-world use cases. Flash loans, for example, only came about with the advent of this technology. At this point, traditionally, whenever an individual acquires a loan, they must provide the lender with collateral. However, thanks to the power of atomic composability, DeFi platforms can offer their users “flash loans” where they can borrow tokens as long as they can return the principal sum in the same transaction.
This then raises the question, what good is a loan that has to be repaid as part of the same transaction? The simple answer is that composability allows many applications to participate in the same transaction lifecycle, allowing the loan to be used to facilitate other business processes with all of its associated applications. An example of this is “arbitrage,” where an investor can buy a certain token on one platform at a lower price only to sell it on another ecosystem and make up the price difference without using their own capital.
The Future of Web3 and the Role of Atomic Composability
When discussing the idea of composability in the context of the rapidly evolving Web3 ecosystem, the concept relates directly to a host of blockchain applications, including decentralized exchanges (DEX), decentralized applications ( dApps) and Decentralized Autonomous Organizations (DAOs), allowing all the aforementioned entities to work with each other.
Composability allows developers to use/integrate code from other applications into their products, as the vast majority of smart contracts designed to control application logic are open source and publicly available. Finally, it allows a tangible reduction in the development cycles of various dApps since it allows users to simply modify the code libraries of existing dApps and thus create new ones without effort.
Therefore, going forward, it stands to reason that projects like Radix will continue to define the crypto landscape, making this space truly decentralized without compromising network scalability and security.