Composable Asset Dependencies

Composable asset dependencies describe the risk inherent in systems where protocols are built on top of each other, creating a complex web of interconnected assets. If one protocol relies on a token that is itself a derivative or a receipt from another protocol, a failure in the underlying layer can propagate upward.

This layering increases the potential for systemic contagion and makes it difficult to assess the true risk of any single position. Developers must be aware of these dependencies when designing new financial products.

Understanding the full chain of risk is essential for building stable and secure decentralized financial applications. It is a core challenge of the DeFi ecosystem.