Composable Finance, Pallet Revolution, DeFi interoperability

Composable Finance, Pallet Revolution, DeFi interoperability

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Sandeep Nailwal co-founder at Polygon on a Bankless interview thinks Ethereum will continue to serve as the base layer network for most DeFi protocols. Taking a swipe at Polkadot, he shared while the Layer 0 chain may not be able to wrestle powers from Ethereum — Polkadot Relay Chain isn't battle-tested and hence might be hard to be trusted like Ethereum.

A little research on Polkadot and its sister chain — Kusama (together I call them DotSama for convenience)shows it isn't really out to compete but complement — facilitating interoperability between layers (like Arbitrum, Polygon, zkSync) and chains (like Ethereum, Solana, Cosmos etc).

Smart Contract vs Pallet — the divide

Already, the first Polkadot parachain — for common good is live, Kusama; the wilder yet more accommodating cousin of Polkadot 14th auction ends in about a day (Picasso primed to spark a Pallet revolution secured 12th slot).

So unlike Ethereum or any other EVM and non-EVM (e.g Solana & Cardano) network, DotSama developers build with Substrate-based Pallets and not Smart Contracts — the basis for more flexibility and interoperability of Parachains.

Yo Bro! Why the heck is Pallet significant, I thought Smart Contracts rule?

Devs write smart contracts — instructions that associate with and deploy on a specific chain address. Pallets are runtime modules that house the entire logic of a chain's state transition. See Preethi Kasireddy's ELI-5 explanation of what state machine & transition means. Meanwhile, Smart Contracts must consciously implement upgradability — the best way is through Proxy while Parachains due to their Substrate framework can either swap out their entire code through a root command or via a governance pallet.

When you build a smart contract, the aim is to deploy it to a target chain with its pre-set environment. Parachains allow the developer to declare the choice of chain environment and even allow other devs to write smart contracts for it.

With Pallets as the building blocks of DotSama Parachains, they function as the fuel for the natural progression we see in DeFi today — interoperability! Using Pallets — custom or pre-built, Polkadot or Kusama devs can quickly whip up highly interoperable blockchain networks with their unique/independent environment and consensus while tapping in the Relay Chain shared security and consensus.

Meh, wtf! Break it down bro?!%

Think of it like traditional building construction — Pallets are like bricks that come in various sizes and can be stacked to build tall and wide buildings living out any architectural imagination. Smart contracts on the other hand are like building modular or componentized homes. In this case, components of these types of homes like walls and rooms (pre-built) can only be merely slapped together allowing for little changes.

Composable — gigabrains out to solve complex problems

The DotSama era is upon and one team is not shying away from laying the foundational, yet tedious flywheel for others. Composable Finance says it is out to lay the building blocks that will power the much-needed DeFi interoperability powered by its Picasso Parachain — the Pallet Revolution.

I call what Composable is doing as business-focused common good and not the Copy cats, memetic wars — cases of dog eat dogs we see happen in the DeFi space now and then. Easier to just copy-paste codes of other successful projects and launch liquidity attacks. Not Composable. Rather, Pallet devs can tap into Composable's Picasso to launch their Pallets and natively connect to other DotSama parachains while enjoying inter-communication among other pallets on Picasso as well.

Beyond mere rhetorics, Composable has already started deploying pallets (both stand-alone and interdependent): Apollo (an MEV-resistant oracle pallet), Cubic (a vault pallet), and Angular Finance (lending pair) leverageable by other pallet devs as DeFi Primitives for more utility dapps that can be built on DotSama.


AMMs, strategies, lending protocols (Composable's Angular inclusive), and other money legos on DotSama, Ethereum, and Cosmos can feed off Composable's Cubic Vault by depositing liquidity provisioning LP tokens, setting the base for true interoperability and multichain experience for DeFi folks.

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Mosaic bridge — a whirring liquidity wormhole

Splintered liquidity everywhere across the DeFiverse has resulted in poor user experience end-users (whether it's just the regular DEX swapping Joes or the Degens transiting pools across chains and layers in search of alpha) and devs trying to couple existing primitives in a composable manner or having to build entirely from scratch. One can easily describe the sector to be a victim of its own success.

Typical of Composable, it is attacking this DeFi monster head-on with its Mosaic bridge. This single, unified liquidity layer is available to end-users in a simple interface. Meanwhile, devs looking to integrate this chain agnostic liquidity flywheel into their ecosystem to orchestrate the interaction with different bridges, manage routing, initiate callbacks into smart contracts, reliability, and finality can already do this through a live Composable Cross-chain Virtual Machine — XCVM.

The best part is that not only pallets that deploy on Picasso get to feed off Mosaic's liquidity wormhole but also other DotSama Parachains interoperable DNA among themselves also get to benefit. The end result — a single access point for liquidity and hardened layer for Picasso through Mosaic's cross-chain communication with other layers. The biggest winners — $PICA token holders who can stake their tokens on other projects built on the chain, whilst also participating in the governance to decide what new pallets are onboard on Picasso.

Kusama Parachain auctions show the incredible powers of a community as believers band together to help their projects secure limited parachains available. If the FOMO is seen as high now, then what would one make of Polkadot's Parachain auctions soon to start?

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If decentralization is the goal, then clamouring for one chain to rule them all doesn't add any strength to the argument. Chains and Layers should be able to interoperate seamlessly which is what DotSama is bent on making happen. And Composable makes it even easier for an interoperable world with unlimited bandwidth for Pallet developers to deploy on Picasso facilitating the grounds for the next watershed moment in DeFi — trustless interoperability!