Why Funding Protocols Must Be Agnostic to Asset Type

Every new asset type creates a new liquidity silo, leading to capital inefficiency and user friction.\n- TVL is trapped in single-purpose vaults (e.g., stETH, LSTs, yield-bearing stablecoins).\n- Users face high switching costs and slippage when moving between asset ecosystems.\n- Protocols compete for slices of a finite pie instead of accessing a unified capital base.

Users express desired outcomes, not specific asset paths. Agnostic protocols like UniswapX and CowSwap abstract away the 'how'.\n- Solver networks compete to source liquidity from any asset, optimizing for best execution.\n- Enables native yield-bearing collateral (e.g., stETH) to be used directly in DeFi without wrapping.\n- Shifts focus from asset-specific pools to generalized intent fulfillment layers.

Value and activity are distributed across Ethereum L2s, Solana, Avalanche. Agnosticism is a prerequisite for cross-chain functionality.\n- Protocols like LayerZero and Axelar enable generalized message passing for any asset.\n- Funding must be chain-abstracted, allowing a deposit on Arbitrum to secure a loan on Base.\n- Omnichain apps treat liquidity as a global resource, not a chain-local one.

With execution, settlement, and data availability decoupled, the asset layer must also be abstracted.\n- Restaking protocols (EigenLayer) turn diverse LSTs into a homogeneous security commodity.\n- Universal Settlement Layers (e.g., using Cosmos IBC) require asset-agnostic messaging.\n- Reduces integration complexity from O(n*m) to O(1) for new asset types.

Treating all inputs as generic 'value' creates legal ambiguity that is a feature, not a bug.\n- Composability as a shield: Harder to regulate a network that processes intents vs. specific securities.\n- Enables privacy-preserving finance by obscuring the provenance of collateral.\n- Future-proofs protocols against jurisdiction-specific asset blacklists.

The final abstraction: all forms of on-chain value—tokens, NFTs, points, credits—are interoperable capital.\n- ERC-7579 and similar standards enable minimal modular smart accounts to hold and use any asset.\n- Social graphs and attention become collateralizable assets via agnostic intent systems.\n- Unlocks trillions in latent capital currently locked in non-financial primitive states.

Maker's core stability relies on a volatile, concentrated asset (ETH) and a governance process too slow to onboard new collateral. This creates systemic risk and limits scalability.\n- ~60% of DAI is backed by ETH/stETH.\n- New vault types require weeks of governance votes.\n- $5B+ in RWA exposure introduces off-chain legal risk.

Aave V3's portal architecture and risk isolation treat assets as configurable modules, not core protocol logic. This enables permissionless listing on L2s and isolates asset-specific failures.\n- E-Mode optimizes capital efficiency for correlated assets.\n- Isolation Mode contains risky assets from the main pool.\n- Cross-chain portals abstract liquidity location from asset logic.

EigenLayer doesn't care if you stake ETH, LSTs, or LP tokens—it abstracts cryptoeconomic security as a primitive. This is the endgame: funding protocols should settle to a universal security layer, not specific assets.\n- TVL agnostic: Secured by $15B+ in restaked value of any type.\n- Protocols like Lagrange build hyper-parallel ZK proofs atop it.\n- Turns any asset's stake into reusable security.

Protocols like Centrifuge that build entire stacks for single asset classes (e.g., invoices, mortgages) are building narrow rails. The complexity of legal wrappers, oracles, and KYC does not scale across asset types.\n- Niche focus limits TAM and composability.\n- ~$250M TVL after years, versus billions in generic DeFi.\n- High integration friction for other DeFi primitives.

Uniswap V4's hook architecture externalizes asset-specific logic. Need TWAMM for equities? Dynamic fees for stablecoins? A hook handles it, while the core AMM remains asset-agnostic. This is the blueprint.\n- Core protocol manages liquidity and settlement.\n- Hooks manage asset-specific behaviors (limits, fees, oracles).\n- Enables on-chain CLOBs, RWA pools, and more without fork.

Measure winners by Total Value Secured divided by lines of asset-specific code. High ratio = good abstraction. Maker's MCD has a low ratio (high complexity per collateral type). Compound's v2 had a medium ratio. EigenLayer aims for near-infinite ratio.\n- Target: Maximize TVL, minimize asset-handling code.\n- Means: Use generalized oracles (Chainlink CCIP), settlement layers, and modular risk engines.

A protocol tied to a single asset's price feed is a single point of failure. Agnosticism forces reliance on generalized oracle networks like Chainlink or Pyth, distributing risk.\n- Attack Vector Reduction: No single token's manipulation can drain the protocol.\n- Data Redundancy: Leverages aggregated feeds from 80+ sources, not one.

Siloed pools for ETH, wBTC, and stablecoins create capital inefficiency and higher slippage. An agnostic vault treats all collateral as a unified pool.\n- Capital Efficiency: One pool for all assets vs. N pools for N assets.\n- Slippage Reduction: Larger, unified pool depth improves execution for all users.

Hardcoded asset support cannot onboard new LSTs, RWA tokens, or memecoins without governance delays. Agnostic protocols like EigenLayer and Aave V3 win by default.\n- Zero-Time-to-Market: New asset support is permissionless.\n- Governance Minimization: Removes a critical bottleneck for scaling TVL.

Non-agnostic protocols become isolated islands in DeFi. They cannot be used as primitive by intent-based systems like UniswapX or CowSwap, which require generalized asset handling.\n- Lost Integration Revenue: Missed fees from being a default liquidity source.\n- Reduced Utility: Fails the "money Lego" test, limiting protocol utility.