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As the decentralized finance (DeFi) market has matured and gained increasing prominence in the mainstream, the term “atomic composability” has continued to seep into the vernacular of many crypto enthusiasts. Sometimes used interchangeably with words like cross-shard composability, synchronous composability, and cross-shard atomicity, it’s a complicated concept that needs detailed explanation.
First of all, we can see that one of the most striking aspects of the DeFi market is the interoperability between its various dApps and digital assets. This ability to interact is commonly referred to as “composability”. The ability to compose a single transaction while simultaneously using various autonomous smart contracts has enabled developers to innovate and create services otherwise not possible in traditional finance (trad-fi).
For example, developers can build products capable of providing real-time exchange rates via various automated market makers (AMM), or leverage the power of crowdsourced liquidity pools to take advantage of arbitrage opportunities, all thanks to the power of composability.
In order for all of the above operations to be seamless and trouble-free, they must be done simultaneously via a single “atomic step”. In other words, the entire transaction lifecycle – across all smart contracts involved – must be validated and resolved in a single process (otherwise they should fail together) so that there is no margin for a security breach/failure.
Atomic composability is important
Atomicity is an essential foundation for the DeFi sector, especially when it comes to ironing out the inefficiencies that plague today’s trad-fi systems. Despite their obvious importance, most blockchains have attempted to increase their scalability performance by ignoring composability. This has typically been achieved by separating applications and transactions using “shards,” tools that speed operations but do not have direct, atomic access to each other.
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As more shards are introduced into an ecosystem, interoperability decreases more obviously and conflicts between a blockchain’s scalability and composability increase, making true decentralization difficult to achieve. Radix is one platform that has been tackling and tackling this issue head on using their new consensus mechanism called Cerberus. It uses two key unique feature modules that set it apart from its competitors while still allowing it to achieve unlimited scalability without sacrificing composability.
For starters, Cerberus uses a form of sharding where dApps and assets aren’t split across a static set of shards, but instead provide a virtually infinite set of shards where all components of the network are dynamically distributed in parallel with each other. Additionally, Cerberus removes all barriers between its shards with a new consensus design that allows each shard to reach consensus independently.
Radix achieves this by ‘intertwining’ these consensus processes, resulting in fully optimized, frictionless composability and without the limitations that typically result from low scalability.
Composability is a game changer in more ways than one
Some of the most powerful aspects of composability come to life by looking at some of its real-world use cases. Flash loans, for example, only came into existence thanks to the advent of this technology. Up to this point, traditionally, whenever a person purchases a loan, he or she must provide collateral to the lender. However, thanks to the power of atomic composability, DeFi platforms can offer “flash loans” to their users, where they can borrow tokens as long as they can return the principal within the same transaction.
This then raises the question, what is the use of a loan that has to be repaid within the same transaction? The simple answer is that composability allows numerous applications to participate in the same transaction lifecycle, allowing the loan to be used to facilitate other business processes with all related apps. An example of this is ‘arbitrage’, where an investor can buy a certain token from one platform at a lower price only to sell it on another ecosystem and make up the difference in price without investing any of their own capital.
The future of Web3 and the role of atomic composability
Speaking about the idea of composability in the context of the rapidly evolving Web3 ecosystem, the concept is directly tied to a variety of blockchain applications, including decentralized exchanges (DEXs), decentralized applications (dApps), and decentralized autonomous organizations (DAOs). . enable all of the above 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 developed to control application logic are open source and publicly available. Finally, it allows for a noticeable reduction in the development cycles of various dApps, as users can easily modify code libraries of existing dApps and thus create new ones with ease.
Therefore, it stands to reason that projects like Radix will continue to define the crypto landscape and truly decentralize this space without sacrificing scalability and network security.
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