This article will describe how the unbundling and rebundling cycles in SaaS and fintech are playing out in DeFi and crypto applications.

Written by: Lorenzo Valente

As the crypto market matures, investors are looking for clues from past technological booms to predict the next big trend or inflection point.

Historically, digital assets have been difficult to compare simply with previous technology cycles, making it challenging for users, developers, and investors to predict their long-term development trajectory. This dynamic is changing.

According to our research, the "application layer" in the crypto space 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 in SaaS and fintech are playing out in DeFi (Decentralized Finance) and crypto applications. The pattern evolution is as follows:

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

This is an analytical term used by the fintech and crypto communities, referring to the ability of financial or decentralized applications and services—especially at the application layer—to interact, integrate, and build upon each other seamlessly, much like Lego blocks. With this concept at its core, we describe the transformation of product structures in the following two sections.

From Vertical to Modular: The Great Unbundling

In 2010, Andrew Parker of Spark Capital published a blog post depicting how dozens of startups capitalized on the unbundling opportunities presented by Craigslist. Craigslist was a "horizontal" internet marketplace at the time, offering a variety of services ranging from apartment rentals and gigs to product sales, as shown in the diagram below.

Source: Parker 2010. For illustrative purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any specific security.

Parker concluded that many successful companies—Airbnb, Uber, GitHub, Lyft—started by focusing on and verticalizing a small part of Craigslist's extensive functionality and greatly improved it.

This trend initiated the first major phase of "market unbundling," during which Craigslist's fully bundled, multipurpose marketplace gave way to single-purpose applications. New entrants not only improved the user experience (UX) of Craigslist—they redefined the experience. In other words, "unbundling" broke down a broadly based platform into strictly scoped, autonomous verticals, disrupting Craigslist by serving users in unique ways.

What made that wave of unbundling possible? A fundamental shift in technological infrastructure, including advancements in APIs (Application Programming Interfaces), cloud computing, mobile user experience, and embedded payments, lowered the barriers to building focused applications with world-class user experiences.

A similar unbundling has evolved in the banking sector. For decades, banks offered a bundled set of financial services under a single brand and application—from savings loans to insurance. However, over the past decade, fintech startups have been precisely dismantling this bundle, each focusing on a specific vertical.

Traditional banking bundles include:

• Payments and remittances

• Checking and savings accounts

• Interest-bearing products

• Budgeting and financial planning

• Loans and credit

• Investment and wealth management

• Insurance

• Credit and debit cards

Over the past decade, banking bundles have been systematically broken down into a series of venture-backed fintech companies, many of which have now become unicorns, decacorns, or are close to becoming hectocorns:

• Payments and remittances: PayPal, Venmo, Revolut, Stripe

• Bank accounts: Chime, N26, Monzo, SoFi

• Savings and yield: Marcus, Ally Bank

• Personal finance and budgeting: Mint, Truebill, Plum

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

• Investment and wealth management: Robinhood, eToro, Coinbase

• Insurance: Lemonade, Root, Hippo

• Cards and expense management: Brex, Ramp, Marqeta

Each company focuses on a service it can refine and deliver better than existing enterprises, combining its skill set with new technological leverage and distribution models to provide growth-oriented niche financial services in a modular way. In the SaaS and fintech space, unbundling not only disrupted existing businesses but also created entirely new categories, ultimately expanding the total addressable market (TAMs).

From Modular Back to Bundled: The Great Rebundling

Recently, Airbnb launched new "services and experiences" and redesigned its application. Now, users can not only book accommodations but also explore and purchase additional services such as museum visits, food tours, dining experiences, gallery walks, fitness classes, and beauty treatments.

Airbnb, once a peer-to-peer accommodation marketplace, is now evolving into a vacation superapp—rebundling travel, lifestyle, and local services into a single, cohesive platform. Additionally, over the past two years, the company has expanded its product range beyond home rentals and is now integrating payments, travel insurance, local guides, concierge tools, and curated experiences into its core booking services.

Robinhood is undergoing a similar transformation. The company disrupted the brokerage industry with commission-free stock trading and is now actively expanding into a full-stack financial platform, rebundling many verticals that were previously unbundled by fintech startups.

Over the past two years, Robinhood has taken the following initiatives:

• Launched payment and cash management features (Robinhood Cash Card)

• Increased cryptocurrency trading

• Launched retirement accounts

• Launched margin investing and credit cards

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

These initiatives indicate that Robinhood, like Airbnb, is bundling previously fragmented services to build a comprehensive financial superapp.

By controlling more of the financial stack—savings, investing, payments, loans, and advisory—Robinhood is reshaping itself from a brokerage into a full-fledged consumer finance platform.

Our research indicates that this dynamic of unbundling and rebundling is also affecting the crypto industry. In the remainder of this article, we provide two case studies: Uniswap and Aave.

Unbundling and Rebundling Cycles in DeFi: Two Case Studies

Case Study 1: Uniswap—From 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, hosted by its team with an official frontend. The core AMM functionality—swapping ERC-20 tokens in a constant product pool—existed within a single on-chain protocol. Users primarily accessed it through Uniswap's own web interface. This design proved highly successful, with Uniswap's on-chain trading volume exploding to over $1.5 trillion by mid-2023. With its tightly controlled tech stack, Uniswap provided a smooth user experience for token swaps, which guided the early development of DeFi.

At that 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 through its liquidity pool reserves (x*y=k formula) within a closed system. The Uniswap team developed the main user interface (app.uniswap.org), which interacted directly with the Uniswap contracts. In the early days, most users accessed Uniswap through this dedicated frontend, similar to a proprietary exchange portal. Aside from Ethereum itself, Uniswap did not rely on any other infrastructure. Liquidity providers and traders interacted directly with Uniswap's contracts, without built-in external data feeds or plugin hooks. The system was simple but isolated.

As DeFi expanded, Uniswap evolved into composable liquidity "Lego" rather than a standalone application. The open, permissionless nature of the protocol meant that 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 functionalities to play a larger role:

• Decentralized Exchange (DEX) Aggregators and Wallet Integration: A significant portion of Uniswap's trading volume began flowing through external aggregators (such as 0x API and 1inch) rather than through Uniswap's own interface. By the end of 2022, it was estimated that 85% of Uniswap's swap volume was routed through aggregators like 1inch, as users sought the best prices across multiple exchanges. Wallets like MetaMask also integrated Uniswap liquidity into their swap functionalities, allowing users to trade on Uniswap directly from their wallet applications. This external routing reduced reliance on Uniswap's native frontend and made the AMM more like a plug-and-play module within the DeFi stack.

• Oracles and Data Indexers: While Uniswap's contracts have historically not required price oracles for trading, 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. Uniswap did not build its own indexing nodes but leveraged community-driven data infrastructure—a modular approach that offloads heavy data queries to specialized indexers.

• Multi-Chain Deployment: During the modular phase, Uniswap expanded to numerous blockchains and Rollups beyond Ethereum: such as Polygon, Arbitrum, BSC, and Optimism. Uniswap's governance authorized its core protocol to deploy on these networks, effectively treating each blockchain as a foundational layer plugin for Uniswap liquidity. This multi-chain strategy emphasizes Uniswap's composability: the protocol can exist on any Ethereum Virtual Machine (EVM)-compatible chain, rather than binding its fate to a vertically integrated environment.

Recently, Uniswap has been showing signs of returning to vertical integration, seemingly aiming to capture more of the user journey and optimize its stack for its use cases. Key reintegration developments include:

• Native Mobile Wallet: In 2023, Uniswap launched Uniswap Wallet—a self-custodial mobile application—followed by a browser extension where users can store tokens and interact directly with Uniswap's products. The launch of the wallet is an important step towards controlling the user interface layer, rather than ceding it to wallets like MetaMask. With its own wallet, Uniswap now vertically integrates user access, ensuring that swaps, browsing non-fungible tokens (NFTs), and other activities occur within its controlled environment and may route to Uniswap liquidity.

• Integrated Aggregation (Uniswap X): Uniswap also introduced Uniswap X, a built-in aggregation and trade execution layer, rather than relying on third-party aggregators to find the best prices. Uniswap X utilizes an open network of off-chain "fillers" to source liquidity from various AMMs and private market makers, then settles trades on-chain. Thus, Uniswap has transformed its interface into a one-stop trading portal, aggregating liquidity sources for user benefit—similar to the services provided by 1inch or Paraswap. By running its own aggregator protocol, Uniswap Labs has reintegrated this functionality, keeping users within its ecosystem while ensuring optimal prices. Importantly, Uniswap X is integrated into the Uniswap web application itself—potentially also integrated into the wallet in the future—so users no longer need to leave Uniswap for an aggregator.

• Application-Specific Chain (Unichain): In 2024, Uniswap announced its own Layer 2 blockchain—referred to as "Unichain"—as part of the Optimism Superchain. Elevating 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 around 250 milliseconds. Uniswap will control the blockchain environment in which its contracts operate, rather than functioning as an application on another chain. By operating Unichain, Uniswap will be able to optimize everything from gas costs to maximum extractable value (MEV) mitigation for its exchange and introduce native protocol fee sharing with UNI holders. This complete circular transformation allows Uniswap to evolve from a decentralized application (dApp) reliant on Ethereum to a vertically integrated platform with proprietary UI, execution layer, and dedicated blockchain.

Case Study 2: Aave—From P2P Lending Market to Multi-Chain Deployment, and Back to a Credit Superapp

Aave's origins trace back to ETHLend in 2017, a self-contained lending application that later transitioned in 2018 to a decentralized peer-to-peer lending market named Aave. The team developed smart contracts for lending and provided an official web interface for users to participate. At this stage, ETHLend/Aave matched lenders and borrowers' loans in an order book manner, handling everything from interest rate logic to loan matching.

As it evolved towards a pooled lending model similar to Compound, Aave underwent vertical integration. The Aave v1 and v2 contracts on Ethereum included innovations such as flash loans—a protocol feature that allows for uncollateralized borrowing with repayment within the same transaction—and interest rate algorithms. Users primarily accessed the protocol through the Aave web dashboard. The protocol internally managed key functions such as interest accumulation and liquidation, relying little on third-party services. In short, Aave's early design was a monolithic money market: a dApp with its own UI handling deposits, loans, and liquidations in one place.

Aave has been part of a broader DeFi symbiosis, integrating MakerDAO's DAI stablecoin as a key collateral and lending asset from the beginning. In fact, during its incarnation as ETHLend, Aave launched simultaneously with Maker and immediately supported DAI, reflecting the close coupling between those vertical integration pioneers and indicating early on that no protocol is an island. Even in its "vertical" phase, Aave benefited from another protocol's product—stablecoins—to operate.

As DeFi evolved, Aave unbundled and adopted a modular architecture, outsourcing parts of its infrastructure and encouraging others to build on its platform. Several shifts illustrate Aave's move towards composability and external dependencies:

• External Oracle Networks: Aave does not exclusively run its own price feeds but instead utilizes Chainlink's decentralized oracles to provide reliable asset prices for collateral valuation. Price oracles are crucial for any lending protocol as they determine when loans are under-collateralized. Aave governance chose Chainlink Price Feeds as the primary oracle source for most assets on aave.com, thereby outsourcing pricing infrastructure to a specialized third-party network. While this modular approach enhances security—e.g., Chainlink aggregates multiple data sources—it also means Aave's stability relies on external services.

• Wallet and Application Integration: Aave's lending pools have become building blocks for many other dApps. Portfolio managers and dashboards like Zapper and Zerion, DeFi automation tools like DeFi Saver, and yield optimizers access Aave's contracts through its open software development kit (SDK). Users can deposit or borrow through third-party frontends interfacing with Aave, but the official Aave interface is just one of many access points. Even DEX aggregators indirectly utilize 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 functionalities—such as using Aave flash loans within Uniswap arbitrage bots—all coordinated by external aggregators. As a liquidity module rather than an isolated application, its composability expands Aave's influence within the DeFi ecosystem.

• Multi-Chain Deployment and Isolation Models: Similar to Uniswap, Aave is also deployed across multiple networks—such as Polygon, Avalanche, Arbitrum, Optimism—essentially cross-chain modularity. Aave v3 introduced features like isolated 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 showcase Aave's flexibility in operating across various environments, not just an 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. The modular approach increases Aave's composability and reduces the need to "reinvent the wheel." The trade-off is that Aave partially loses control over those stack components and faces risks associated with reliance on external services.

Recently, Aave has shown signs of returning to vertical integration by developing internal versions of key components that were previously dependent on others. For example, in 2023, Aave launched its own stablecoin, GHO. Historically, Aave facilitated lending for various assets, particularly MakerDAO's DAI stablecoin, which scaled significantly on Aave. With GHO, Aave now has a native stablecoin on its platform, serving as a distribution channel for other protocol stablecoins. Like DAI, GHO is an over-collateralized, decentralized stablecoin pegged to the US dollar. Users can mint GHO using their deposits on Aave V3, allowing Aave to reclaim the previously outsourced vertical component of the lending stack—stablecoin issuance. Thus:

• Aave is an issuer of stable assets—not just a lending venue for existing stablecoins—and directly controls the parameters and revenue of its stablecoins. GHO competes with DAI, allowing Aave to now recapture interest payments back into its own ecosystem, with GHO interest benefiting AAVE token stakers instead of indirectly increasing fees for MakerDAO.

• The introduction of GHO also requires dedicated infrastructure. Aave has "facilitators"—including the main Aave pools—that can mint and burn GHO and set governance policies. By controlling this new functional layer, Aave has built an internal version of a MakerDAO product to serve its own community.

In another notable initiative, Aave is leveraging Chainlink's Smart Value Routing (SVR) or similar mechanisms to recapture MEV (Maximum Extractable Value, akin to order flow payments in stocks) for Aave users. The tighter coupling with the oracle layer to redirect arbitrage profits back to the protocol is blurring the lines between the Aave platform and the underlying blockchain mechanisms. This move indicates Aave's interest in customizing even lower-level infrastructure, such as oracle behavior and MEV capture, for its own benefit.

While Aave has not yet launched its own wallet or chain like Uniswap and others, the founder's other ventures suggest a goal of building a self-sufficient ecosystem. For example, the Lens Protocol for social networking could integrate with Aave for finance based on social reputation. Architecturally, Aave is moving towards providing all key financial primitives: lending, stablecoins (GHO), and potentially decentralized social identities (Lens), rather than relying on external protocols. In my view, this product strategy is about deepening the platform: with stablecoins, loans, and other services, Aave's user retention and protocol revenue should benefit.

In summary, Aave has evolved from a closed-loop lending dApp to one that accesses DeFi and relies on open Lego-like components from others like Chainlink and Maker, and is now returning to a more expansive vertically integrated financial suite. The launch of GHO particularly emphasizes Aave's intention to reintegrate the stablecoin layer it had previously outsourced to MakerDAO.

Our research indicates that the trajectories of Uniswap, Aave, MakerDAO, Jito, and other protocols showcase a broader cyclical pattern in the crypto industry. In the early days, vertical integration—building a monolithic product with very specific use cases—was necessary to pioneer new functionalities 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 field matured, modularity and composability became priorities: protocols unbundled parts of their stack to launch new features or provide more value to external stakeholders, leveraging the strengths of other protocols to become "money Legos."

However, the success of modularity and composability has brought new challenges. Relying on external modules introduces dependency risks and limits the ability to capture value created elsewhere by the protocol. Now, the largest participants with strong product-market fit (PMF) and revenue streams are turning their strategies back towards vertical integration. While they have not abandoned decentralization or composability, these projects are strategically reintegrating key components: 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 mitigate reliance on competitors. Uniswap is building wallets and chains, 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 ultimately seek its own vertical integration solution.

Conclusion

History does not repeat itself, but it often rhymes. The crypto space is humming a familiar tune. Just like the SaaS and marketplace revolutions of the past decade, DeFi and application layer protocols are focusing on new technological primitives, evolving user expectations, and a desire for more value capture, all while progressing along the trajectory of unbundling and re-bundling.

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 later began their own re-bundling journeys, integrating new verticals and services into cohesive, sticky platforms.

The crypto space is following the same path at a revolutionary pace.

Initially a strictly scoped vertical experiment—Uniswap as an AMM, Aave as a money market, Maker as a stablecoin vault—modularity became permissionless Legos, opening up liquidity, outsourcing key functions, and allowing composability to thrive. Now, with scale expanded, the market is fragmenting, and the pendulum is beginning to swing back.

Today, Uniswap is becoming a trading super app with its own wallet, chain, cross-chain standards, and routing logic. Aave is issuing its own stablecoin and bundling lending, governance, and credit primitives together. Maker is building a brand new chain to improve governance of its monetary ecosystem. Jito is unifying staking, MEV, and validator logic into a full-stack protocol. Hyperliquid is merging exchanges, L1 infrastructure, and EVM into a seamless on-chain financial operating system (OS).

In the crypto space, primitives are designed to be unbundled, but the best user experiences—and the most defensible businesses—are increasingly re-bundled, which is not a betrayal of composability but rather an embodiment of it: building the best Lego blocks and using them to construct the best castles.

DeFi is compressing the entire cycle into just a few years. How is this possible? DeFi operates in fundamentally different ways:

• Permissionless infrastructure reduces friction for experimentation: any developer can fork, copy, or extend existing protocols in hours rather than months.

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

• Liquidity is highly liquid. Total Value Locked (TVL) moves at an incentivized pace, making it easier for new experiments to gain attention, and successful experiments can scale exponentially.

• The potential market size is larger. Protocols enter a global, permissionless pool of users and capital from day one, often reaching scale faster than Web2 counterparts constrained by geography, regulation, or distribution channels.

DeFi's super apps are rapidly scaling in real-time. We believe the winners will not be the protocols with the most modular stacks, but those that know exactly which parts of the stack they should own, which parts to share, and when to switch between the two.

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