• News
    • Bitcoin
    • Altcoins
    • Blockchain
    • DeFi
    • Regulation
    • Scams
  • NFT
  • Metaverse
  • Analysis
  • Learn
  • Videos
  • Blogs
  • Market Cap
  • Shop
What's Hot

What Is Yield Farming in Crypto? A Beginner’s Guide to DeFi Income

2025-06-02

Bitcoin to $200k?! Latest 2025 BTC Price Predictions

2025-06-01

My Last Day at Bitcoin 2025 Conference

2025-05-31

Subscribe to Updates

Get the latest creative news from FooBar about art, design and business.

Facebook Twitter Instagram
Crypto Investor News Network
  • News
    • Bitcoin
    • Altcoins
    • Blockchain
    • DeFi
    • Regulation
    • Scams
  • NFT

    All Eyes on Art: Upcoming Collections to Watch the Week of February 4

    2025-02-05

    Creator of rabbit AI assistant has hidden NFT past

    2024-05-02

    Ethereum tops daily NFT sales at US$7 mln, ends weakest month of 2024

    2024-05-02

    Top NFT Airdrops and Giveaways for May 2024

    2024-05-02

    Casio Launches NFT Collection Celebrating 50th Anniversary

    2024-05-01
  • Metaverse

    Shib: The Metaverse – Part of the Expanding Shiba Inu Ecosystem

    2025-01-03

    Experience to Earn: Everdome’s Metaverse Frontier

    2024-12-30

    Beyond Bots: Meta Motivo and the Dawn of Humanlike Digital Life

    2024-12-13

    Exploring NetVRk: What Is Behind This AI-Driven Virtual Universe?

    2024-10-28

    Council of Europe Highlights Metaverse’s Impact on Privacy and Democracy

    2024-09-05
  • Analysis

    Crypto Exchange Coinbase Lists New DeFi Altcoin Project Built on Base Blockchain

    2023-12-13

    Ethereum Price Bears Keep Pushing, Why Decline Isn’t Over Yet

    2023-12-13

    Trader Bullish on Cosmos (ATOM), Says One Dogecoin Rival Setting Up for Next Leg Up – Here’s His Outlook

    2023-12-13

    AVAX Price Pumps 50% and Dumps 15%, Why Uptrend Is Still Strong

    2023-12-13

    Top Trader Predicts Parabolic Rally for Solana Competitor – Here’s His Upside Target

    2023-12-13
  • Learn

    What Is Yield Farming in Crypto? A Beginner’s Guide to DeFi Income

    2025-06-02

    What Is Asset Tokenization? Types, Why It Matters Now [2025]

    2025-05-30

    What Is Crypto Margin Trading? A Beginner-Friendly Guide to Leverage

    2025-05-26

    What Is Circulating Supply in Crypto? A Beginner’s Guide to Token Supply

    2025-05-23

    What Is a DEX? How DEXs Work and Why They Matter

    2025-05-21
  • Videos

    Bitcoin to $200k?! Latest 2025 BTC Price Predictions

    2025-06-01

    My Last Day at Bitcoin 2025 Conference

    2025-05-31

    Bitcoin Summer Doldrums Ahead? 🌞📉 Or Fireworks Coming?🔥

    2025-05-31

    Bitcoin Is Preparing For A Massive Move According To This Legendary Analyst

    2025-05-31

    🔥 Top 15 FIRE Stories of the Week 🔥 You Won’t Believe #5 😲📈

    2025-05-30
  • Blogs
  • Market Cap
  • Shop
Facebook Twitter Instagram TikTok
Crypto Investor News Network
Home»DeFi»How DeFi Protocols are Building More Granular and Extensible Capabilities
DeFi

How DeFi Protocols are Building More Granular and Extensible Capabilities

2023-08-01No Comments5 Mins Read
Facebook Twitter Pinterest LinkedIn Tumblr Email
Share
Facebook Twitter LinkedIn Pinterest Email

For the last few years, decentralized finance (DeFi) has emerged as a fundamental financial backbone of the digital assets space and as a parallel ecosystem to traditional financial markets. The space keeps evolving, creating new experiences and uses for participants.

The first few years of DeFi have been marked by the establishment of programmable financial primitives such as lending, automated market making (AMMs) or derivatives that could serve as building blocks of new financial services and applications. Lately, DeFi has begun powering more abstracted user experiences, building even smaller, more granular micro-primitives. This trend is happening everywhere in DeFi and challenges some of the established patterns in technology markets.

Jesus Rodriguez is the CEO of IntoTheBlock.

We are entering the era of DeFi micro-primitives.

DeFi micro-primitives are not an industry-acknowledged trend. I think we might be the first ones to have coined this term, but it seems to be happening everywhere. DeFi protocols are becoming more granular, more decentralized, more trustless and, yes, more complex. This trend seems a bit counterintuitive to the normal evolution of infrastructure technology and could have severe implications for the future of DeFi.

DeFi micro-primitives

Conceptually, the idea of DeFi micro-primitives is extremely simple. Imagine taking the functionalities of an automated market maker (AMM), such as pool rebalancing logic, token swapping, and fees collection, and customizing each of these functionalities using different smart contracts. In this way, each functionality becomes its own micro-primitive.

Let’s explore the notion of DeFi micro-primitives through the lens of familiar DeFi protocols:

Uniswap v4: The proposed architecture for the largest AMM introduces the notion of Hooks as smart contracts that can incorporate logic across the lifecycle of pools. Unlike the current versions of UniSwap that include a single approach for managing the lifecycle of pools, v4 changes that by introducing new micro-primitives. For instance, Hooks can execute post-trade arbitrage logic and auto-compound LP fees to change the rebalancing logic.

See also  DeFi Could Erupt 100X in Next 10 Years As Most of World Financial System Gets Replaced, Says Maple Finance CEO

Eigen Layer: This popular platform that pioneered the restaking approach can be seen as a collection of micro-primitives for validators. Traditionally, validator clients encapsulate the entire logic of the validation process. However, Eigen Layer introduces the concept of an Open Marketplace that includes different security capabilities for validators. In this marketplace, validators can opt-in for each micro-primitive to enhance their capabilities.

Maker: In their recently published Endgame, Maker fragments its capabilities further by introducing the notion of SubDAOs. Before SubDAOs, all functionalities of the Maker protocol were governed by a single governance and tokenomics process. The goal of the Endgame is to allow each SubDAO to focus on specific capabilities of Maker and follow its own governance process and tokenomics.

Flashbots: The main MEV protocol is working towards the implementation of the Single Unifying Auction for Value Expression (SUAVE), which introduces new micro-primitives by unbundling the block builder and mempool roles from existing blockchains, offering a plug-and-play alternative. The current version of Flashbots has already taken some steps towards more decentralization with the separation of the proposer and builder roles, and now SUAVE is expanding that pattern with more micro-primitives. The SUAVE architecture includes micro-primitives such as the optimal execution market, which allows multiple executors to add their logic to provide the best execution for a given transaction.

There are plenty of other examples of DeFi micro-primitives within the new generation of DeFi protocols. By employing DeFi micro-primitives, these protocols are becoming more customizable, decentralized, and capable of offering a wider range of services. This trend could significantly shape the future of DeFi and its applications.

See also  High Ether Yields Drive $50M to DeFi Protocol Pendle Finance

Counterintuitive DeFi micro-primitives

To some, the move to granular and extensible DeFi micro-primitives might seem counterintuitive. After DeFi has built a strong foundation for capital formation and trading with primitives such as AMMs, lending, bridges, or derivatives, one might argue that the obvious step is to create higher-level experiences that attract more capital into the space. Certainly, there are initiatives in that area, but now we have this trend of DeFi micro-primitives, which can certainly make the user experience in the space more complex.

Read more: Jesus Rodriguez – A New Blockchain for Generative AI?

The obvious benefit of the DeFi micro-primitive movement is that it makes DeFi more extensible, programmable and composable. An additional interesting benefit is that it might reduce the number of unnecessary forks of DeFi protocols when adding a handful of features, as these features can be well encapsulated as micro-primitives of the parent protocol. This could also lead to the reusability of security and robustness from larger DeFi protocols for smaller functionalities, avoiding the need to build smaller and potentially more vulnerable forks.

However, the DeFi micro-primitives trend also introduces plenty of challenges. For starters, the surface for attacks in DeFi protocols based on micro-primitives is drastically larger than that of more monolithic alternatives.

For instance, think about Uniswap v4 using hundreds of Hooks, each with several potential attack vectors. Additionally, if the level of complexity of DeFi micro-primitives is too high, it might hinder developer adoption, effectively making DeFi protocols more vulnerable with no obvious benefit in adoption. Striking the right balance between granularity and complexity becomes crucial for the success of this trend.

See also  Innovative Web3 Tools Address Booming DeFi Growth

A more granular DeFi

In the coming months, we can expect more DeFi protocols to divide their functionalities into extensible, programmable micro-primitives. This will lead to a DeFi landscape that is more granular, flexible, and developer-friendly, but also more complex. If DeFi is to become a true parallel alternative to traditional finance, primitives such as lending and AMMs won’t be sufficient to build sophisticated financial services. Smaller, more targeted, and programmable micro-primitives are necessary. As DeFi continues to evolve, the adoption of these smaller, focused building blocks will likely play a significant role in shaping the future of decentralized finance.

Building Capabilities DeFi Extensible Granular Protocols
Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Posts

What Is Yield Farming in Crypto? A Beginner’s Guide to DeFi Income

2025-06-02

Building A Better Bitcoin?

2025-03-17

Crypto’s Hidden Gems: Where Devs Are Building

2025-01-09

Kraken Drops a Bombshell: New Blockchain Set to Disrupt DeFi!

2024-10-24
Add A Comment

Leave A Reply Cancel Reply

Top Posts
Metaverse

Experience Luxury Living in Ethereum Towers’ Customizable Apartments

2023-06-03

Ethereum Worlds, the luxury Metaverse builders behind Ethereum Towers, have announced the release of their…

Bitcoin

Why Bitcoin’s ‘great’ transition might leave gold ETFs behind

2024-02-22

Posted: February 22, 2024 Ray Dalio changed his views on Bitcoin, recognizing it as a…

DeFi

DeFi Projects Simultaneously Send Mysterious Messages “03.24.23”

2023-03-24

Key Points: Yesterday, a series of DeFi projects suddenly posted a photo with the words…

Subscribe to Updates

Get the latest news and Update from CINN about Crypto, Metaverse and NFT.

Editors Picks

What Is Yield Farming in Crypto? A Beginner’s Guide to DeFi Income

2025-06-02

Bitcoin to $200k?! Latest 2025 BTC Price Predictions

2025-06-01

My Last Day at Bitcoin 2025 Conference

2025-05-31

Bitcoin Summer Doldrums Ahead? 🌞📉 Or Fireworks Coming?🔥

2025-05-31
Crypto Investor News Network
Facebook Twitter Instagram TikTok
  • Contact
  • Terms & Conditions
  • Privacy Policy
  • DMCA
  • Disclouser
© 2025 - All rights are reserved.

Type above and press Enter to search. Press Esc to cancel.

bitcoin
Bitcoin (BTC) $ 105,668.31
ethereum
Ethereum (ETH) $ 2,613.61
tether
Tether (USDT) $ 1.00
xrp
XRP (XRP) $ 2.26
bnb
BNB (BNB) $ 665.33
solana
Solana (SOL) $ 156.74
usd-coin
USDC (USDC) $ 1.00
dogecoin
Dogecoin (DOGE) $ 0.195154
tron
TRON (TRX) $ 0.270264
cardano
Cardano (ADA) $ 0.694519
bitcoin
Bitcoin (BTC) $ 105,668.31
ethereum
Ethereum (ETH) $ 2,613.61
tether
Tether (USDT) $ 1.00
xrp
XRP (XRP) $ 2.26
bnb
BNB (BNB) $ 665.33
solana
Solana (SOL) $ 156.74
usd-coin
USDC (USDC) $ 1.00
dogecoin
Dogecoin (DOGE) $ 0.195154
tron
TRON (TRX) $ 0.270264
cardano
Cardano (ADA) $ 0.694519