Composability is the property of blockchain-based financial systems that allows a single asset position to serve multiple functions simultaneously without requiring separate legal agreements, intermediaries, or capital allocations for each use. A tokenized Treasury bond held on-chain can earn yield, back a stablecoin, serve as collateral for a loan, and remain tradable at the same time, all within a single position. In traditional finance, replicating that multi-use profile requires splitting capital across siloed systems, engaging multiple counterparties, and navigating separate legal frameworks for each function, which adds cost, time, and friction at every layer.

Standard Chartered estimates that this difference meaningfully lowers the effective cost of capital for on-chain positions compared to their off-chain equivalents, giving DeFi protocols a structural advantage that traditional finance cannot replicate without fundamentally rebuilding its infrastructure. Kendrick uses BlackRock's BUIDL fund as a concrete example of composability working in practice today, with a single tokenized Treasury product simultaneously generating yield, collateralizing stablecoins, and functioning as a lending market asset on Aave. The argument is that as more institutional capital moves on-chain and discovers this multi-use efficiency, the demand for DeFi infrastructure to support it will compound across three channels: more assets moving on-chain, a higher share of those being deposited into DeFi, and a higher share again being borrowed against, with each lever amplifying the revenue impact on established protocols.