The birth of a DeFi super application

As the crypto market matures, investors are looking to past technology booms for clues to predict the next major trend or inflection point. Historically, digital assets have been difficult to simply compare to previous technology cycles, making it difficult for users, developers, and investors to predict their long-term trajectory. This dynamic is changing. Our research suggests that the "application layer" in crypto is evolving, much like the unbundling and rebundling cycles experienced by SaaS (software as a service) and fintech platforms. In this article, I will describe how the unbundling and rebundling cycles seen in SaaS and fintech are playing out in DeFi (decentralized finance) and crypto applications. The model has evolved as follows:

The concept of "composability" is key to understanding the unbundling and rebundling cycle.

This is an analytical term used by the fintech and crypto communities to refer to the ability of financial or decentralized applications and services—especially at the application layer—to seamlessly interact, integrate, and build upon each other like Lego bricks. With this concept at the core, we describe the transformation of product structure in the following two subsections. In 2010, Andrew Parker of Spark Capital published a blog post outlining how dozens of startups were capitalizing on the unbundling opportunity presented by Craigslist, the then-horizontal internet marketplace offering everything from apartments to gig work to merchandise, as shown in the figure below. Parker concluded that many successful companies—Airbnb, Uber, GitHub, Lyft—started by focusing on and verticalizing a small part of Craigslist’s broad functionality and dramatically improving it. This trend ushered in the first major phase of “marketplace unbundling,” during which Craigslist’s fully bundled, multi-purpose marketplace gave way to single-purpose apps. The newcomers didn’t just improve Craigslist’s user experience (UX)—they redefined it. In other words, "unbundling"—breaking a broad-based platform into narrowly scoped, autonomous verticals—disrupted Craigslist by serving users in unique ways.

What made that wave of unbundling possible? Fundamental shifts in technology infrastructure, including advances in APIs (application programming interfaces), cloud computing, mobile user experiences, and embedded payments, lowered the barrier to entry for building focused applications with world-class user experiences.

The same unbundling is evolving in banking. For decades, banks offered a bundled suite of financial services—everything from savings and loans to insurance—under a single brand and app. Over the past decade, however, fintech startups have been precisely dismantling this bundle, each specializing in a specific vertical.

A traditional banking bundle includes:

• Payments and remittances

• Checking and savings accounts

• Interest-bearing products

• Budgeting and financial planning

• Loans and credit

• Investing and wealth management

• Insurance

• Credit and debit cards

Payments and remittances: PayPal, Venmo, Revolut, Stripe

Bank accounts: Chime, N26, Monzo, SoFi

Savings and earnings: Marcus, Ally Bank

Personal finance and budgeting: Mint, Truebill, Plum

Loans and credit: Klarna, Upstart, Cash App, Affirm

Investing and wealth management: Robinhood, eToro, Coinbase

Insurance: Lemonade, Root, Hippo

Cards and Spend Management: Brex, Ramp, Marqeta

Each company focuses on a service it can hone and deliver better than incumbents, combining its skill set with new technology levers and distribution models to offer growth-oriented niche financial services in a modular manner. In the SaaS and fintech sectors, unbundling has not only disrupted incumbents but also created entirely new categories, ultimately expanding the total addressable market (TAM).

From Modularity Back to Bundling: The Great Rebundling

Recently, Airbnb launched new "Services & Experiences" and redesigned its app. Now, users can not only book accommodations but also explore and purchase add-on services such as museum visits, food tours, dining experiences, gallery walks, fitness classes, and beauty treatments. Airbnb, once a peer-to-peer accommodations marketplace, is evolving into a vacation superapp—rebundling travel, lifestyle, and local services into a single, cohesive platform. Furthermore, over the past two years, the company has expanded its product offerings beyond home rentals and is now integrating payments, travel insurance, local guides, concierge-style tools, and curated experiences into its core booking service. Robinhood is undergoing a similar transformation. The company, which disrupted the brokerage industry with commission-free stock trading, is now aggressively expanding into a full-stack financial platform and is rebundling many verticals previously unbundled by fintech startups.

Over the past two years, Robinhood has:

• Introduced payments and cash management features (Robinhood Cash Card)

• Added cryptocurrency trading

• Introduced retirement accounts

• Introduced margin investing and a credit card

• Acquired Pluto (an AI-powered research and wealth advisory platform)

These moves show that Robinhood, like Airbnb, is bundling together previously fragmented services to build a comprehensive financial super app. By controlling more of the financial stack—savings, investing, payments, lending, and advice—Robinhood is reinventing itself from a brokerage to a full-service consumer finance platform. Our research shows that this unbundling and rebundling dynamic is impacting the crypto industry. In the remainder of this article, we provide two case studies: Uniswap and Aave. The DeFi Unbundling and Rebundling Cycle: Two Case Studies Case Study 1: Uniswap—From a Monolithic AMM to Liquidity Lego and Back to a Trading Superapp In 2018, Uniswap launched on Ethereum as a simple yet revolutionary automated market maker (AMM). In its early stages, Uniswap was a vertically integrated application: a small smart contract codebase with an official frontend hosted by its team. The core AMM functionality—exchanging ERC-20 tokens in a constant-product pool—exists within a single on-chain protocol. Users primarily access it through Uniswap's own web interface. This design has proven highly successful, with Uniswap's cumulative on-chain trading volume exploding to over $1.5 trillion by mid-2023. With its tightly controlled technology stack, Uniswap provides a smooth user experience for token swaps, which spearheaded the development of DeFi in its early days. At the time, Uniswap v1/v2 implemented all trading logic on-chain, without the need for external price oracles or off-chain order books. The protocol internally determined prices within a closed system using its liquidity pool reserves (the formula x*y=k). The Uniswap team developed the primary user interface (app.uniswap.org) to interact directly with the Uniswap contract. Early on, most users accessed Uniswap through this dedicated front-end, similar to a proprietary exchange portal. Uniswap does not rely on any other infrastructure other than Ethereum itself. Liquidity providers and traders interact directly with Uniswap's contracts, with no built-in external data feeds or plugin hooks. The system is simple but siloed. As DeFi expanded, Uniswap evolved into a composable set of liquidity "Lego blocks" rather than a standalone application. The protocol's open, permissionless nature meant other projects could integrate Uniswap's pools and add layers to it. Uniswap Labs gradually relinquished control over parts of the stack, allowing external infrastructure and community-built features to play a greater role: Decentralized Exchange (DEX) Aggregators and Wallet Integrations: The majority of Uniswap's trading volume began flowing through external aggregators like the 0x API and 1inch, rather than through Uniswap's own interface. By the end of 2022, an estimated 85% of Uniswap's swap volume was routed through aggregators like 1inch as users sought the best prices across multiple exchanges. Wallets like MetaMask have also integrated Uniswap liquidity into their exchange functionality, allowing users to trade on Uniswap from their wallet applications. This external routing reduces reliance on Uniswap's native frontend and makes AMMs more like a plug-and-play module in the DeFi stack. Oracles and Data Indexers: While Uniswap's contracts did not and still do not require price oracles to trade, the broader ecosystem built around Uniswap does. Other protocols use Uniswap's pool prices as on-chain oracles, and Uniswap's interface itself relies on external indexing services. For example, Uniswap's frontend uses subgraphs from The Graph to query pool data off-chain for a smoother user interface (UI) experience. Rather than building its own indexing nodes, Uniswap leverages community-driven data infrastructure—a modular approach that offloads heavy data queries to specialized indexers.

Multi-chain Deployment: During its modularization phase, Uniswap expanded to numerous blockchains and rollups beyond Ethereum: Polygon, Arbitrum, BSC, and Optimism, among others. Uniswap's governance authorized the deployment of its core protocol on these networks, effectively treating each blockchain as a base-layer plugin for Uniswap liquidity. This multi-chain strategy emphasizes Uniswap's composability: the protocol can exist on any chain compatible with the Ethereum Virtual Machine (EVM), rather than tying its fate to a single vertically integrated environment.

Recently, Uniswap has been moving back toward vertical integration, seemingly with the goal of capturing more of the user journey and optimizing the stack for its use cases. Key reintegration developments include:

• Native Mobile Wallet:

• In 2023, Uniswap released Uniswap Wallet—a self-hosted mobile application—followed by a browser extension where users could store tokens and interact directly with Uniswap’s products. The launch of the wallet was a major step towards controlling the user interface layer, rather than ceding it to wallets like MetaMask. With its own wallet, Uniswap now vertically integrated user access, ensuring that swaps, browsing non-fungible tokens (NFTs), and other activities take place in an environment it controls and can potentially be routed to Uniswap liquidity.

• Integrated Aggregation (Uniswap X): ... Uniswap X uses an open network of off-chain "fillers" to source liquidity from various AMMs and private market makers, then settles trades on-chain. As a result, Uniswap has transformed its interface into a one-stop trading portal, aggregating liquidity sources for the benefit of users—similar to the services provided by 1inch or Paraswap. By running its own aggregator protocol, Uniswap Labs has reintegrated this functionality, keeping users in-house while guaranteeing the best prices. Importantly, Uniswap X is integrated into the Uniswap web app itself—and potentially into the wallet in the future—so users no longer need to leave Uniswap for the aggregator. Application-Specific Chains (Unichain): In 2024, Uniswap announced its own layer-2 blockchain—dubbed "Unichain"—as part of the Optimism Superchain. Taking vertical integration to the infrastructure level, Unichain is a custom rollup tailored for Uniswap and DeFi trading, aiming to reduce Uniswap user fees by approximately 95% and latency to approximately 250 milliseconds. Uniswap will control the blockchain environment in which its contracts operate, rather than operating as an application on another chain. By operating Unichain, Uniswap will be able to optimize everything for its exchange, from gas costs to maximum extractable value (MEV) mitigation, and introduce native protocol fee sharing with UNI holders. This full-circle transformation transforms Uniswap from an Ethereum-dependent decentralized application (dApp) to a vertically integrated platform with a proprietary UI, execution layer, and dedicated blockchain. Case Study 2: Aave—From a P2P Lending Marketplace to Multi-Chain Deployment and Back to a Credit Superapp Aave's origins can be traced back to ETHLend in 2017, a self-contained lending application that gave way to a decentralized peer-to-peer lending marketplace renamed Aave in 2018. The team developed smart contracts for lending and provided an official web interface for users to participate. During this phase, ETHLEND/Aave matched lenders and borrowers for loans using an order book approach and handled everything from interest rate logic to loan matching. As it evolved toward a pooled lending model similar to Compound, Aave underwent vertical integration. The Aave v1 and v2 contracts on Ethereum incorporated innovations such as flash loans—an in-protocol feature that allows uncollateralized borrowing with repayments in the same transaction—and interest rate algorithms. Users primarily access the protocol through the Aave network dashboard. The protocol manages key functions, such as interest accrual and liquidations, internally, with minimal reliance on third-party services. In short, Aave's early design was a monolithic money market: a dApp with its own UI that handled deposits, loans, and liquidations in a single location. Part of the broader DeFi symbiosis, Aave integrated MakerDAO's DAI stablecoin as a key collateral and lending asset from the outset. In fact, in its incarnation as ETHLend, Aave launched simultaneously with Maker and immediately supported DAI, reflecting the tight coupling among those pioneers of vertical integration and demonstrating early on that no protocol is an island. Even in its "vertical" phase, Aave benefited from the product of another protocol—its stablecoin—to operate. As DeFi evolved, Aave unbundled and adopted a modular architecture, outsourcing portions of its infrastructure and encouraging others to build on its platform. Several shifts illustrate Aave’s move toward composability and external dependencies: External Oracle Networks: Rather than operating its own price feeds, Aave employs Chainlink’s decentralized oracles to provide reliable asset prices for collateral valuation. Price oracles are crucial to any lending protocol because they determine when loans become undercollateralized. Aave governance selected Chainlink Price Feeds as the primary oracle source for most assets on aave.com, outsourcing pricing infrastructure to a specialized third-party network. While this modular approach improves security—for example, Chainlink aggregates many data sources—it also means Aave’s stability relies on external services. Wallet and App Integrations: Aave’s lending pools serve as the building blocks for many other dApp integrations. Portfolio managers and dashboards like Zapper and Zerion, DeFi automation tools like DeFi Saver, and yield optimizers all access Aave's contracts through its open software development kit (SDK). Users can deposit or borrow through third-party frontends that interface with Aave, but the official Aave interface is just one access point among many. Even DEX aggregators indirectly leverage Aave's flash loans for complex, multi-step trades executed by services like 1inch. By open-sourcing its design, Aave allows for composability: other protocols can integrate Aave's functionality—for example, using Aave flash loans within a Uniswap arbitrage bot—all coordinated by external aggregators. As a liquidity module rather than a standalone application, its composability expands Aave's influence in the DeFi ecosystem. Multi-chain Deployment and Segregated Mode: Similar to Uniswap, Aave is deployed on multiple networks—such as Polygon, Avalanche, Arbitrum, and Optimism—essentially cross-chain modularity. Aave v3 introduced features such as segregated markets for certain assets—architectural modularity—creating different risk parameters for each market, sometimes operating separately from the main pool. It also launched permissioned variants, such as "Aave Arc" for Know Your Customer (KYC) institutions, which are conceptually independent "module instances" of Aave. These examples demonstrate Aave's flexibility to operate in a variety of environments, not just one integrated one. In this unbundling phase, Aave relies on a broader infrastructure stack: Chainlink oracles for data, The Graph for indexing, wallets and dashboards for user access, and tokens from other protocols—such as Maker's DAI or Lido's staked ETH—as collateral. This modular approach increases Aave's composability and reduces the need to "reinvent the wheel." The trade-off is a partial loss of control over those parts of the stack, as well as the risks associated with relying on external services. Recently, Aave has shown signs of returning to vertical integration by developing in-house versions of key components that it previously relied on. For example, in 2023, Aave launched its own stablecoin, GHO. Historically, Aave has facilitated lending and borrowing across various assets, most notably MakerDAO's DAI stablecoin, which has achieved significant scale on Aave. With GHO, Aave now has a native stablecoin on its platform that serves as a distribution channel for other protocols' stablecoins. Like DAI, GHO is an overcollateralized, decentralized, and USD-pegged stablecoin. Users can mint GHO with their deposits on Aave V3, allowing Aave to acquire a previously outsourced vertical part of the lending stack—stablecoin issuance. Therefore:

  • Aave is an issuer of a stablecoin—not just a lending venue for existing stablecoins—and directly controls the stablecoin’s parameters and revenue. GHO is a competitor to DAI, so now Aave can recycle interest payments into its own ecosystem, where GHO interest can benefit AAVE token stakers rather than indirectly increasing MakerDAO’s fees.

  • The introduction of GHO also required dedicated infrastructure. Aave has “facilitators”—including the main Aave pool—that can mint and burn GHO and set governance policies. By controlling this new layer of functionality, Aave has built an internal version of the MakerDAO product to serve its own community. In another notable move, Aave is leveraging Chainlink's Smart Value Routing (SVR), or a similar mechanism, to recapture MEV (maximum extractable value, similar to payment for order flow in stocks) for Aave users. Tighter coupling with the oracle layer to redirect arbitrage profits back into the protocol is blurring the line between the Aave platform and the underlying blockchain mechanisms. This move suggests Aave's interest in customizing even lower-level infrastructure, such as oracle behavior and MEV capture, for its own benefit. While Aave has yet to launch its own wallet or chain, as has Uniswap and others, its founder's other ventures suggest his goal is to build a self-sustaining ecosystem. For example, Lens Protocol, a social network, could be integrated with Aave for social reputation-based finance. Architecturally, Aave is moving towards offering all key financial primitives: lending, stablecoins (GHO), and potentially decentralized social identity (Lens), rather than relying on external protocols. In my view, this product strategy is about deepening the platform: with stablecoins, lending, and other services, Aave's user retention and protocol revenue should benefit. In summary, Aave has evolved from a closed-loop lending dApp to an open LEGO platform that taps into DeFi and relies on others like Chainlink and Maker, and is now returning to a more expansive, vertically integrated financial suite. The launch of GHO, in particular, underscores Aave's intention to reintegrate the stablecoin layer it once outsourced to MakerDAO. Our research suggests that the journeys of Uniswap, Aave, MakerDAO, Jito, and other protocols illustrate broader cyclical patterns in the crypto industry. In the early days, vertical integration—building a single, monolithic product with a very specific purpose—was necessary to pioneer new features like automated trading, decentralized lending, stablecoins, or MEV capture. These self-contained designs allowed for rapid iteration and quality control in emerging markets. As the space matured, modularity and composability became priorities: protocols unbundled parts of their stack to launch new features or provide more value to external stakeholders, relying on the strengths of other protocols to become "money legos." However, the success of modularity and composability brought new challenges. Relying on external modules introduced dependency risk and limited the ability to capture value created elsewhere. Now, the largest players and protocols with strong product-market fit (PMF) and revenue streams are shifting their strategies back toward vertical integration. While not abandoning decentralization or composability, these projects are re-integrating key components for strategic reasons: launching their own chains, wallets, stablecoins, frontends, and other infrastructure. Their goal is to provide a more seamless user experience, capture additional revenue streams, and protect against dependency on competitors. Uniswap is building a wallet and chain, Aave is issuing GHO, MakerDAO is forking Solana to build NewChain, and Jito is merging staking/re-staking with MEV. We believe that any sufficiently large DeFi application will eventually seek its own vertically integrated solution. Conclusion: History doesn't repeat itself, but it does rhyme. The crypto space is humming a familiar tune. Much like the SaaS and marketplace revolution of the past decade, DeFi and application-layer protocols are focusing on new technical primitives, evolving user expectations, and a desire for greater value capture, while simultaneously following a trajectory of unbundling and rebundling. In the 2010s, startups specializing in a niche of the massive Craigslist marketplace effectively atomized it into distinct companies. This unbundling gave rise to giants—Airbnb, Uber, Robinhood, Coinbase—all of which subsequently embarked on their own rebundling journeys, integrating new verticals and services into cohesive, sticky platforms. Crypto is following the same path at a revolutionary pace. What began as narrowly scoped vertical experiments—Uniswap as an AMM, Aave as a money market, Maker as a stablecoin treasury—became modularized into permissionless Lego blocks, opening up liquidity, outsourcing key functions, and allowing composability to flourish. Now that usage has scaled, the market is fragmenting, and the pendulum is swinging back. Today, Uniswap is becoming a trading superapp with its own wallet, chain, cross-chain standards, and routing logic. Aave is issuing its own stablecoin, bundling lending, governance, and credit primitives. Maker is building an entirely new chain to improve the governance of its monetary ecosystem. Jito unifies staking, MEV, and validator logic into a full-stack protocol. Hyperliquid merges exchanges, L1 infrastructure, and the EVM into a seamless on-chain financial operating system (OS). In crypto, primitives are unbundled by design, but the best user experiences—and the most defensible businesses—are increasingly rebundled. This isn't a betrayal of composability, but a realization of it: build the best Lego bricks and use them to build the best castle. DeFi is compressing the entire cycle into just a few years. How? DeFi operates fundamentally differently: Permissionless infrastructure reduces the friction of experimentation: any developer can fork, copy, or extend an existing protocol in hours instead of months.

  • Capital formation is instantaneous—with tokens, teams can fund new projects, ideas, or incentives faster than ever before.

  • Liquidity is highly liquid. Total value locked (TVL) moves at the speed of incentives, making it easier for new experiments to gain traction and for successful ones to scale exponentially.

  • The addressable market is larger. Protocols have access to a global, permissionless pool of users and capital from day one and typically reach scale faster than their Web2 counterparts, which are limited by geography, regulation, or distribution channels.

  DeFi's super apps are rapidly expanding in real time. We believe the winners won't be the protocols with the most modular stack, but rather those that understand exactly which parts of the stack to own, which to share, and when to switch between them.