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, said Jesus Rodriguez, CEO of IntoTheBlock. We are entering the era of DeFi micro-primitives.
DeFi micro-primitives are a new trend in the decentralized finance (DeFi) space, where protocols are becoming more granular, more decentralized, more trustless, and more complex. This trend is counterintuitive to the normal evolution of infrastructure technology and could have severe implications for the future of DeFi.
Conceptually, DeFi micro-primitives are small, focused building blocks that can be used to customize the functionalities of an automated market maker (AMM), such as pool rebalancing logic, token swapping, and fees collection. Examples of DeFi micro-primitives can be found in Uniswap v4, Curve, and Synthetix.
The move to granular and extensible DeFi micro-primitives has its benefits, such as making DeFi more extensible, programmable, and composable. However, it also introduces challenges, such as a larger surface for attacks and a potential hindrance of developer adoption. Striking the right balance between granularity and complexity is key for the success of this trend.
The adoption of DeFi micro-primitives could significantly shape the future of DeFi and its applications. As DeFi continues to evolve, these smaller, focused building blocks will likely play a significant role in the space.