The ultimate form of DeFi: super applications are devouring everything, the script of SaaS and fintech is being replayed on-chain.

Original Title: Decentralized Finance Is Following The SaaS And Fintech Playbooks

Original author: Lorenzo Valente, ARK Invest

Original translation: White55, Mars Finance

As the cryptocurrency industry matures, investors are beginning to look for clues from past technology waves to predict the next major trend or turning point. Historically, digital assets have been difficult to directly compare with previous technology cycles, making it challenging for users, developers, and investors to foresee their long-term development path.

This situation is changing. According to our research, the "application layer" of cryptocurrency is evolving, and its pattern is quite similar to the "disassembly-reassembly" cycle experienced by SaaS (Software as a Service) and fintech platforms.

In this article, I will explain how the split and restructuring cycles in the SaaS and fintech sectors are being replicated in DeFi and crypto applications. The evolution logic of this model is as follows:

To understand the cycle of splitting and reorganization, the concept of "composability" is crucial. In the fintech and crypto community, "composability" is a common analytical term that refers to the ability of financial or decentralized applications and services—especially at the application layer—to seamlessly interact, integrate, and further build upon each other like Lego bricks. Based on this core concept, we will further analyze the evolution path of product structure in the next two sections.

From Vertical to Modular: The Great Split

In 2010, Andrew Parker of Spark Capital published a blog describing how dozens of startups were taking advantage of Craigslist's "splitting" opportunities. At that time, Craigslist was a "horizontal" internet marketplace offering a variety of services ranging from housing rentals, part-time jobs to second-hand goods trading, as shown in the picture below.

Parker concluded that many successful companies—Airbnb, Uber, GitHub, Lyft—carved out a very small vertical from Craigslist's extensive functionality and significantly improved their experience. This trend initiated the first wave of "market fragmentation": the large and comprehensive general platform of Craigslist is gradually being replaced by applications focused on single purposes. These newcomers not only enhanced the user experience (UX) of Craigslist but also completely redefined it. In other words, "fragmentation" deconstructs a broad platform into narrower, independently autonomous verticals that satisfy user needs in unique ways, thereby disrupting Craigslist.

So, what has driven this wave of splitting? Behind it is a transformation in technological infrastructure. Advances in API (Application Programming Interface), cloud computing, mobile user experience, and embedded payments have lowered the barriers to building focused applications, enabling developers to launch more precise services with a world-class user experience.

The same kind of unbundling has also appeared in the banking sector. For decades, banks have offered a bundled set of financial services under the same brand and application—from savings and loans to insurance. However, over the past decade, fintech startups have gradually dismantled this bundling model in a "surgical" manner, with each focusing on a specific vertical.

The "packaging service" of traditional banks includes:

Payment and Transfer

Checking and Savings Accounts

Deposit Appreciation Products

Budgeting and Financial Planning

Lending and Credit

Investment and Wealth Management

Insurance

Credit Card and Debit Card

Over the past decade, this "banking gift package" has been systematically dismantled, giving rise to a large number of fintech companies supported by venture capital, many of which have grown into unicorns, decacorns, or even approached hectocorns:

Payments and Transfers: PayPal, Venmo, Revolut, Stripe

Bank accounts: Chime, N26, Monzo, SoFi

Savings and Appreciation: Marcus, Ally Bank

Personal Finance and Budgeting: Mint, Truebill, Plum

Lending and Credit: Klarna, Upstart, Cash App, Affirm

Investment and Wealth Management: Robinhood, eToro, Coinbase

Insurance: Lemonade, Root, Hippo

Card and Expense Management: Brex, Ramp, Marqeta

These companies each focus on a specific service area that they can do better than traditional banks, and by leveraging new technologies and distribution models, they modularize growth-oriented segmented financial services.

In SaaS and fintech, disruption is not only a challenge to incumbents but also creates entirely new categories, ultimately expanding the total addressable market (TAM).

From modularization back to bundling: the great reintegration

Recently, Airbnb launched the "Services and Experiences" section and redesigned its app. Now, users can not only book accommodations but also explore and purchase additional offerings such as museum visits, food tours, dining experiences, gallery strolls, fitness classes, and beauty treatments.

Initially just a peer-to-peer accommodation marketplace, Airbnb is gradually evolving into a vacation super app - repackaging travel, lifestyle, and local services into a unified, coherent platform. Moreover, over the past two years, Airbnb's products have long surpassed home rental, gradually integrating payments, travel insurance, local tours, concierge tools, and curated experiences into its core booking services.

Robinhood is also undergoing a similar transformation. Once, it disrupted the traditional brokerage industry with commission-free stock trading, and now it is aggressively expanding into a full-stack financial platform, re-integrating many of the vertical services that were split apart by fintech startups.

In the past two years, Robinhood has taken the following actions:

Launch Robinhood Cash Card, enabling payment and cash management;

Add cryptocurrency trading functionality;

Launch retirement accounts;

Introduce margin investment and credit cards;

Acquisition of Pluto, an AI-driven research and wealth advisory platform.

These initiatives indicate that Robinhood, like Airbnb, is regrouping its originally decentralized services to build a comprehensive financial super app. By controlling more of the financial stack—savings, investments, payments, lending, and financial advisory—Robinhood is reshaping itself from a brokerage into a full-fledged consumer finance platform.

Our research shows that this "split-recombine" dynamic is also impacting the cryptocurrency industry. Next, we will analyze using Uniswap and Aave as case studies.

The Splitting and Reintegration Cycle of DeFi: Two Case Studies

Case 1: Uniswap - From Monolithic AMM to Liquidity Lego, and then to Trading Super App

In 2018, Uniswap launched on Ethereum as a simple yet revolutionary automated market maker (AMM). The early Uniswap was a vertically integrated application: a small smart contract codebase, plus an official frontend hosted by the team. Its core AMM functionality—swapping ERC-20 tokens in a constant product pool—operated on-chain, existing as a standalone protocol. Users primarily accessed this functionality through Uniswap's own web interface. This design proved extremely successful; by mid-2023, Uniswap's cumulative on-chain trading volume had surpassed $1.5 trillion. With a highly controlled stack, Uniswap provided a smooth user experience in token swapping, laying the groundwork for the early development of Decentralized Finance.

In the v1/v2 phase, Uniswap implemented all trading logic on-chain, without the need for external price oracles or off-chain order books. The protocol determines prices within a closed system through liquidity pool reserves (the x*y=k formula). The Uniswap team developed the main user interface that interacts directly with the contracts. In the early days, most users accessed the protocol through this frontend, which was almost equivalent to a dedicated decentralized trading entry point. Besides Ethereum itself, Uniswap does not rely on other infrastructures. Liquidity providers and traders interact directly with the contracts, resulting in a system that is simple yet relatively isolated.

With the expansion of DeFi, Uniswap has evolved from a single application into a composable "liquidity LEGO". Its open and permissionless nature allows other projects to integrate and expand its pools. Uniswap Labs has gradually loosened control over the stack, allowing external infrastructure and community-built features to play a larger role:

Decentralized Exchange Aggregators and Wallet Integration: A significant volume of transactions on Uniswap has begun to flow through external aggregators such as 0x API and 1inch, rather than its own interface. By the end of 2022, it is estimated that 85% of the transaction volume was routed by aggregators like 1inch, as users pursue the best prices across platforms. Wallets like MetaMask have also integrated Uniswap's liquidity into their swap functionality, allowing users to directly call Uniswap for trading within the wallet. This has made AMMs more like a plug-and-play module in the DeFi stack, rather than relying on a native frontend.

Oracles and Data Indexing: Although the Uniswap contract itself does not require oracles to execute trades, other protocols surrounding its ecosystem use the pool prices from Uniswap as an on-chain price reference. Its official frontend also relies on external indexing services, such as querying pool data through The Graph's subgraphs, to provide a smoother interface experience. Uniswap itself does not need to run indexing nodes but instead leverages community-driven data infrastructure—a modular approach that outsources the burden of data processing to specialized indexing services.

Multi-chain deployment: In the modular phase, Uniswap is no longer limited to Ethereum but extends to multiple blockchains and Rollups such as Polygon, Arbitrum, BSC, and Optimism. Its governance mechanism authorizes the core protocol to be deployed on these networks, treating each blockchain as a liquidity plugin. This multi-chain strategy highlights its composability: Uniswap can exist on any EVM-compatible chain rather than being bundled into a single vertical environment.

However, recently Uniswap has begun to return to vertical integration, seemingly aiming to regain control of the user journey and optimize the entire stack for its own use cases. Key reintegration actions include:

Native Mobile Wallet: In 2023, Uniswap launched its self-custody mobile wallet "Uniswap Wallet", followed by a browser extension that allows users to store tokens directly and interact with the product. This marks the beginning of its reclaiming control over the user interface layer, rather than relying entirely on wallets like MetaMask. Through its own wallet, Uniswap has reined in activities such as token swaps and NFT browsing, potentially routing liquidity back to Uniswap.

Built-in Aggregation (Uniswap X): To eliminate reliance on third-party aggregators, Uniswap has launched the built-in aggregation and trading execution layer Uniswap X. It obtains liquidity from multiple AMMs and market makers through an off-chain "filler" network, and then settles on-chain. This way, Uniswap's interface evolves into a one-stop trading portal, integrating the best prices for users like 1inch or Paraswap. The difference is that this feature is operated by Uniswap's own protocol, allowing users to experience it fully without redirects. Uniswap X has been embedded in its web application and may also appear in wallets in the future.

Exclusive Chain (Unichain): In 2024, Uniswap announced the launch of its own Layer 2 blockchain "Unichain" as part of the Optimism Superchain. By extending vertical integration to the infrastructure layer, Unichain is optimized for Uniswap and Decentralized Finance trading, aiming to reduce fees by about 95% and latency to 250 milliseconds. Uniswap is no longer just an application that relies on other chains but fully controls the blockchain environment that carries its contracts. By operating Unichain, Uniswap can optimize all aspects from Gas costs to MEV mitigation and introduce native protocol fee sharing to UNI holders. This full-cycle transformation means that Uniswap has evolved from a decentralized application reliant on Ethereum to a vertically integrated platform with a dedicated interface, aggregation execution layer, and dedicated blockchain.

Case Study 2: Aave - From Peer-to-Peer Lending Market to Multi-Chain Deployment, and Then to Credit Super App

The origins of Aave can be traced back to 2017 when it was known as ETHLend, an independent lending application. In 2018, ETHLend was renamed Aave, evolving into a decentralized peer-to-peer lending market. The team developed smart contracts for lending and provided an official web interface for users to participate. At this stage, ETHLend/Aave used an order book-like method to match loans, handling all aspects from interest rate logic to loan matching.

With its gradual shift towards a liquidity pool model (similar to Compound's fund pool lending), Aave has achieved vertical integration. Its v1 and v2 contracts on Ethereum introduced innovations such as flash loans—where borrowing can be completed without collateral within the same transaction—and interest rate algorithms. Users primarily access the service through the Aave official web dashboard. The protocol internally handles key functions such as interest accumulation and liquidation, relying almost entirely on its own services without third-party dependencies. In short, Aave's early design was a monolithic currency market: a decentralized application with its own UI that processed deposits, loans, and liquidations on the same platform.

Aave has always been a part of the larger Decentralized Finance symbiotic relationship. From the very beginning, it has used MakerDAO's DAI stablecoin as a core collateral and lending asset. In fact, Aave launched almost simultaneously with Maker during the ETHLend phase and immediately supported DAI, which indicates that these vertically integrated pioneers are closely coupled with each other, and it also shows that there were no "island protocols" early on. Even in the "vertical" phase, Aave's operation relies on products from other protocols — stablecoins.

With the expansion of DeFi, Aave began to "split" and embrace a modular architecture, outsourcing part of its infrastructure while encouraging others to develop on its platform. Several key shifts in its evolution towards composability and external dependencies include:

External Oracle Networks: Aave no longer fully relies on its own price sources, but instead adopts Chainlink's decentralized oracle to provide reliable asset pricing for evaluating collateral value. Price oracles are crucial for lending protocols as they determine when loans are in an under-collateralized state. Aave governance chose Chainlink as the primary price source for most assets, thereby outsourcing the pricing infrastructure to a professional third-party network. While this modular approach enhances security (for example, Chainlink aggregates data from multiple sources), it also means that Aave's stability depends to some extent on external services.

Wallet and Application Integration: Aave's liquidity pools are gradually becoming the foundational modules for many dApps. Portfolio management tools and dashboards (like Zapper, Zerion), DeFi automation tools (like DeFi Saver), yield optimizers, etc., all access its contracts through Aave's open SDK. Users can even access or borrow through third-party interfaces, with the official interface being just one of many entry points. DEX aggregators also indirectly utilize Aave's flash loan feature to complete complex multi-step transactions initiated by services like 1inch. Aave's open-source design brings composability: other protocols can package its functionalities into their own logic, such as calling Aave's flash loans in Uniswap arbitrage bots. This positioning as a liquidity module rather than an isolated application allows its reach to further extend into the entire DeFi ecosystem.

Multi-chain deployment and isolation mode: Similar to Uniswap, Aave has also expanded to multiple networks, including Polygon, Avalanche, Arbitrum, Optimism, etc., effectively achieving cross-chain modularization. Aave v3 introduces "isolation market," setting independent risk parameters for specific assets, and sometimes even operating independently from the main liquidity pool. At the same time, Aave has launched a "permissioned" version - Aave Arc, designed for KYC-compliant institutional clients, essentially an independent modular instance of Aave.

These examples illustrate that Aave has demonstrated flexibility during the fragmentation phase, no longer confined to a single integrated environment, but rather leveraging a broader infrastructure: Chainlink provides data, The Graph offers indexing, wallets and dashboards serve as user entry points, and tokens from other protocols (such as DAI or Lido's stETH) are used as collateral. Modularity enhances composability and avoids reinventing the wheel. However, the cost is a decrease in Aave's control over parts of the stack and an increase in external dependency risks.

In recent years, Aave has begun to move towards vertical integration, independently developing key components that were previously reliant on external providers. In 2023, Aave launched its own stablecoin, GHO. Historically, Aave primarily facilitated users borrowing other stablecoins, especially DAI, which has a significant scale on Aave. The emergence of GHO means that the Aave platform itself now has a native stablecoin and has become a distribution channel for other protocol stablecoins. Similar to DAI, GHO is an over-collateralized, decentralized stablecoin pegged to the US dollar. Users can mint GHO by depositing on Aave v3, allowing Aave to take ownership of the "stablecoin issuance" aspect in the lending stack.

The result is:

Aave is no longer just a place for borrowing and lending stablecoins, but rather an issuer of stable assets, directly controlling the parameters and income of stablecoins. GHO competes with DAI, allowing Aave to cycle interest back into its own ecosystem, and the收益 of GHO can directly benefit AAVE token stakers, rather than indirectly increasing revenue for MakerDAO.

The introduction of GHO also requires dedicated infrastructure. Aave has established "facilitators" (including the main liquidity pool) to mint and burn GHO, and has set governance rules. With this new functionality layer, Aave has effectively created its own version of a MakerDAO product tailored for its community.

In addition, Aave is also utilizing mechanisms such as Chainlink's Smart Value Routing (SVR) to help users recover MEV (Maximum Extractable Value, similar to order flow payments in the stock market). The deep coupling with the oracle layer is blurring the boundaries between Aave and the underlying blockchain mechanisms by returning arbitrage profits to the protocol. This indicates that Aave intends to further customize the underlying infrastructure, such as oracle behavior and MEV capture, to seek self-interest.

Although Aave has not launched its own wallet or chain like Uniswap, other projects initiated by its founders suggest that its goal is to build a self-sufficient ecosystem. For example, the Lens Protocol social network it launched may potentially integrate with Aave in the future to explore finance based on social reputation. Architecturally, Aave is gradually providing all core financial primitives: lending, stablecoins (GHO), and perhaps decentralized identity (Lens), rather than relying on external protocols. At the core of its product strategy is "deepening the platform," enhancing user stickiness and protocol revenue through services like stablecoins and lending.

In summary, Aave's evolution path is: from a closed lending dApp to an open "liquidity Lego" that relies on external protocols such as Chainlink and Maker, and now reintegrating key functions to create a larger vertical financial suite. Especially with the launch of GHO, it highlights Aave's desire to regain control over the stablecoin layer that was once outsourced to MakerDAO.

Our research indicates that the trajectories of projects like Uniswap, Aave, MakerDAO, and Jito reveal a broader cyclical pattern in the crypto industry. In the early stages, vertical integration—building standalone products around specific scenarios—was crucial for pioneering new features like automated trading, decentralized lending, stablecoins, or MEV capture. This self-contained design allowed projects to rapidly iterate in the early market while maintaining quality control. As the industry matured, modularity and composability became mainstream: protocols began to break apart their stacks, leveraging external advantages to launch new features or create more value for external stakeholders, gradually becoming "financial Legos."

However, the success of modularity and composability has also brought new challenges. Relying on external modules increases risk and limits the protocol's ability to capture the value it creates. Today, those leading protocols with strong PMF (Product-Market Fit) and revenue sources are refocusing their strategic emphasis back on vertical integration. They have not abandoned decentralization and composability, but have instead strategically reintegrated key components: self-built chains, wallets, stablecoins, front-end, and other infrastructures. The goal is to provide a smoother user experience, capture additional revenue sources, and prevent dependence on competitors.

Uniswap is building a wallet and a dedicated chain; Aave issues GHO; MakerDAO forks Solana to launch NewChain; Jito integrates staking/re-staking with MEV. In our view, any sufficiently large Decentralized Finance application will ultimately seek its own vertical integration solution.

Conclusion

History does not simply repeat itself, but it often rhymes. The crypto industry is playing a familiar melody. Just like the revolution of SaaS and e-commerce platforms over the past decade, Decentralized Finance and application layer protocols are unfolding a trajectory of "disaggregation—reaggregation" around new technological primitives, changing user expectations, and a stronger desire for value capture.

In the 2010s, a group of startups focused on single verticals within the vast Craigslist market effectively split it into independent companies. This "splitting" gave birth to giants—Airbnb, Uber, Robinhood, Coinbase—which later embarked on their own "re-integration" journeys, merging new vertical businesses and services into unified and sticky super platforms.

The cryptocurrency industry is following the same path at a revolutionary speed.

The initial exploration was highly focused vertical experiments: Uniswap is an AMM, Aave is a money market, and Maker is a stablecoin vault. With open and permissionless modular design, they gradually evolved into "financial Legos," releasing liquidity, outsourcing key functions, and allowing composability to thrive. Today, as the scale of use increases and the market diversifies, the pendulum has begun to swing back towards integration.

Today, Uniswap is evolving into a trading super app, equipped with its own wallet, exclusive chain, cross-chain standards, and routing logic; Aave has launched its own stablecoin and repackaged primitives such as lending, governance, and credit; Maker is building a new chain to optimize the governance of its monetary system; Jito is unifying staking, MEV, and validation logic into a full-stack protocol; Hyperliquid is integrating exchanges, L1 infrastructure, and EVM to create a seamless on-chain financial operating system.

In the world of cryptocurrency, primitives are inherently modular, but the best user experience – and the most resilient business models – often come from reintegration. This is not a betrayal of composability, but rather its completion: creating the optimal Lego blocks and using them to build the sturdiest castle.

Decentralized Finance is compressing this entire cycle into just a few years. Why? Because Decentralized Finance is built on a completely different track:

Permissionless infrastructure: Greatly reduces experimental friction, allowing any developer to fork, replicate, or extend existing protocols in a matter of hours instead of months.

Capital formation is completed instantaneously: through tokens, teams can finance new projects, new ideas, or incentive mechanisms at an unprecedented speed.

High liquidity: The total locked amount migrates rapidly with incentives, making it easier for new experiments to gain attention, and successful projects can achieve exponential expansion.

Access to a broader market: The protocol is designed for global, permissionless users and capital pools from day one, often scaling faster than Web2 competitors that are limited by geography, regulation, or distribution channels.

The super applications of DeFi are expanding rapidly in real time. In our view, the winners will not be the projects with the highest degree of modularity, but those that can accurately determine which stacks must be proprietary, which can be shared, and when to flexibly switch between the two.