Throughout our journey, we have viewed the Dolomite protocol primarily as a powerful, standalone application for end-users. We’ve learned how to use its features to lend, borrow, and stake. Today, however, we are going to shift our perspective entirely. We will look beyond the user interface and see the protocol as something more fundamental: a foundational platform upon which new applications and strategies can be built. This is the magic of composability, the concept often described as "money legos."
The spirit of decentralized finance is rooted in the principles of open-source technology. Because protocols like Dolomite are built with publicly viewable and verifiable smart contracts, they are not black boxes. Any developer in the world can read the code, understand its functions, and, most importantly, write their own smart contracts that can interact with it permissionlessly. There are no API keys to request or partnership deals to be signed.
So, what does it truly mean for another protocol to "build on top" of this one? It means that a new application can integrate the core functions of the Dolomite platform as a feature within its own system. Instead of having to build their own complex and heavily audited lending market from scratch, they can simply plug into the deep liquidity and battle-tested security of Dolomite, using it as a reliable base layer.
A classic example of this is a yield aggregator. These are protocols that automatically move user funds between different DeFi applications to find the best possible interest rates. A yield aggregator built on Arbitrum could write a smart contract that constantly monitors the supply rates on Dolomite. It could then automatically deposit its users' capital into the highest-yielding pools, providing a simple, optimized service while using Dolomite as its foundational source of yield.
Another powerful use case involves the creation of automated strategy vaults. We previously discussed the high-risk nature of manually "looping" to create a leveraged position. A different protocol could be designed to automate this entire process. A user could deposit their assets, and that protocol's smart contracts would interact with both a decentralized exchange and the Dolomite platform in a single, seamless transaction to create a specific, pre-defined leveraged strategy.
The possibilities extend even further into the realm of sophisticated structured products. A developer could create an entirely new financial product that combines the base yield from lending on Dolomite with a derivatives strategy from another protocol on Arbitrum. This composability allows for a Cambrian explosion of innovation, as developers can mix and match the unique features of different protocols to create things that were previously impossible.
This creates a profoundly powerful network effect. Every new protocol that integrates with and builds on top of Dolomite does not compete with it, but rather strengthens it. These integrations drive more transaction volume and bring more total value locked (TVL) into the ecosystem. This increased activity benefits all original users of the platform, especially those staking $DOLO, by generating more protocol revenue.
A forward-thinking protocol actively encourages this kind of external innovation. By providing clear technical documentation, developer toolkits, and open communication channels, a project signals to the world that it is not just an application, but a true platform. It welcomes builders and developers to treat the Dolomite protocol as a core piece of financial infrastructure for the entire Arbitrum network.
The long-term value and defensibility of a DeFi protocol are measured not just by the number of people who use its front-end, but by the richness and diversity of the ecosystem that builds around it. This is the true engine of permissionless innovation. Tomorrow, we will bring our focus back to the individual user, as we discuss some of the common mistakes to avoid when participating in any DeFi lending market.
Learn more at @Dolomite
