Modular Assets: The Future of DeFi
Asset issuance is on the verge of a radical transformation. In the next 12 months, DeFi will move beyond static, one-dimensional assets to a new era defined by modular assets. Today, most tokens in DeFi are static—immutable and designed for a single function. Take rETH as an example: it allows staked ETH to remain composable in DeFi, but that's its only purpose.
While a small set of Static Assets will remain foundational, users and builders now require more flexibility and innovation. For instance, new builders are unlikely to topple incumbents like rETH or stETH with another static token. Additionally, users demand more than static utility—they seek dynamic earning potential. So, what’s the next step for DeFi? Enter Modular Assets—tokens that evolve, adapt, and deliver more over time.
What Are Modular Assets?
Modular Assets represent the next level of token flexibility. They are designed to adapt to emerging opportunities in DeFi. Instead of being tied to a single purpose, modular assets can be minted from a variety of underlying tokens, and those underlying assets can be used across an evolving set of protocols, future-proofing the asset at issuance.
At Veda, we pioneered the first Modular Asset with eBTC, developed for ether.fi. eBTC can be minted using WBTC, tBTC, or LBTC, and these underlying assets can be restaked on platforms like Symbiotic, EigenLayer, Babylon, and Karak. As new Bitcoin assets or staking networks emerge, eBTC integrates them seamlessly—without any additional effort from the user.
Not only does this provide a frictionless UX, but it also ensures ether.fi can consistently meet user needs without issuing a stream of new tokens that fragment liquidity. For those looking for even more yield, eBTC retains its composability in DeFi protocols like Pendle and various money markets.
Why Modular Assets Matter
Static Assets, while foundational, are limited by their rigidity. As new metas emerge, Static Assets become stale, forcing projects to mint new assets, rebuild liquidity, and re-integrate across DeFi protocols. This was clearly demonstrated with the shift from Liquid Staking Tokens (LSTs) to EigenLayer Restaked Tokens (LRTs), and again when additional restaking networks like Symbiotic and Karak emerged.
Modular Assets solve this problem. They adapt to new metas without needing to be rebuilt from the ground up. This future-proof design allows builders to compound their DeFi integrations. For users, Modular Assets offer an intuitive, continuous earning solution—no need to switch assets as the DeFi landscape evolves.
Think of Modular Assets like the transition from Layer-1 to Layer-2 blockchains. Layer-2s enhance scalability without compromising the security of Layer-1s. Similarly, Modular Assets build on the security and stability of Static Assets while scaling their yield and utility. Builders can add underlying assets or change where those assets go dynamically, and users gain access to more earning opportunities without jumping through hoops.
The Modular Asset Thesis
Superior Utility: Modular Assets will become the primary user interface over Static Assets due to their enhanced utility.
Streamlined Issuance: Building a Modular Asset takes hours, not months, enabling faster go-to-market strategies for DeFi builders.
Continuous Growth: Assets like eBTC have seen exponential growth, surpassing $250M TVL and continuing to scale across new networks.
Cross-Asset Flexibility: Builders can extend their offerings into ETH, BTC, and USD without being confined to a single asset vertical. Example: ether.fi’s eETH, eBTC and eUSD.
Looking Ahead
Modular Assets represent the future of DeFi. While Static Assets like stETH will continue to play a role, the real innovation lies in Modular Assets that can evolve with the ecosystem. They offer a flexible, scalable solution for builders and users alike—unifying liquidity, streamlining UX, and maximizing earning opportunities.
At Veda, we're leading this charge with Modular Assets like eBTC. By bridging the gap between Static and Modular Assets, we’re enabling DeFi to scale faster and more efficiently. As the space evolves, Modular Assets will become the foundation of the next wave of DeFi innovation, ensuring projects stay ahead in a constantly shifting landscape.