TLDR: Choosing the right protocol is a foundational decision that shapes how your product is built, how fast you ship, and what risks you carry. This guide breaks down the key factors to evaluate, along with the benefits and tradeoffs of each option.

Simplicity affects security, operations, and compliance. Complex systems have larger attack surfaces, are harder to monitor, and more difficult to explain to stakeholders and regulators.

Minimal moving parts, clear system boundaries, well-defined failure modes, and manageable codebase size.

Simple protocols have fewer built-in features but offer smaller attack surfaces, easier monitoring, and the flexibility to build compliant products on top without forking.

Complex protocols bundle more features into smart contracts, but this increases code risk and often forces integrators to fork when they need customization or compliance controls.

Integration quality affects time to market, reliability, and your ability to implement compliance controls consistently.

Quality documentation, developer tooling (SDKs, APIs, test environments), responsive support, flexible integration patterns, and most importantly, the quality of the integration team you’re working with.

Direct integration requires more technical investment upfront but gives you full control over your product experience for users.

Integrating via middleware can accelerate initial deployment but often reduces transparency, limits customization, and creates vendor dependencies that constrain you later.

This answers a core question: Who really owns the infrastructure you’re building on? Can the rules change after you’ve committed capital?

Whether core contracts are immutable or upgradeable, who controls upgrades, what timelocks exist, and whether there are non-upgrade pathways that change protocol behaviors.

Upgradeable protocols can patch bugs, but upgradable code introduces counterparty risk and each upgrade resets the protocol’s track record (my take on the Lindy Effect of DeFi brands): you’re trusting whoever controls the upgrade key.

Immutable protocols require more upfront diligence, but they offer something valuable in return: certainty that what you integrate today will work the same way tomorrow. For integrators building long-term products, this predictability often outweighs the flexibility of upgrades.

Noncustodiality is foundational for DeFi. It affects legal characterization, who can move assets, and how users experience risk during stress. In my view, this should not be compromised for any DeFi protocol.

Where assets live, who can move funds, withdrawal behavior during stress, in-kind redemption support, and whether losses are socialized or first-to-withdraw wins.

Noncustodial designs ensure users always control their assets (critical post-FTX), eliminate counterparty risk for safekeeping, and guarantee users can exit at any time. This is central to the ethos of onchain finance, and to building products your users can trust.

Modularity determines whether you can compose, configure, and control behavior without forking the protocol or fragmenting liquidity.

Application-layer configurability for compliance, ability to choose risk strategies or curators, support for different integration models, and preservation of network effects.

Modular, neutral infrastructure lets you own the full product experience, eligibility rules, user flows, risk parameters, etc. while still accessing shared liquidity.

Monolithic protocols are simpler initially, but when you need different control levers for different jurisdictions or user segments, you’re often forced to integrate a forked version of the protocol, which fragments liquidity and defeats the purpose of DeFi being shared infrastructure in the first place.

Security is an evolving game. Audits are important, but only one signal. With long-standing protocols being breached recently (take Balancer V2 for example), ongoing investment in security matters more than past credentials.

Design philosophy (simplicity, modularity), multiple independent audits, active bug bounties, evidence of engineering rigor (testing, formal verification), and post-deployment practices (monitoring, incident response, transparent postmortems).

Longer-standing protocols aren’t automatically safer, and upgradeable protocols reset their security track record with each change. Simpler, immutable codebases accumulate confidence over time precisely because the code doesn’t change. Heavy auditing is valuable, but it doesn’t address economic, oracle, or integration risks that emerge in production.

Governance is the protocol’s control panel. A key distinction: a protocol can be governed by a DAO while meaningfully limited in what governance can do. This is governance minimization.

Scope of authority (what can change), speed and safeguards (timelocks, multi-sigs), privileged roles (emergency powers, oracle admins), and real-world behavior during stress events.

Broad governance authority might enable faster crisis response (but in certain situations where governance consensus is needed, it is actually slower), but it also means integrators are exposed to decisions outside their control: parameter changes, fee switches, or access restrictions that can disrupt your product without warning. This also exposes integrators to vendor lock-ins and increase switch costs.

Governance-minimized protocols limit what anyone can change, shifting control to the application layer where integrators can make their own decisions. This requires integrators to handle more themselves, but it also means no one else can pull the rug.

Transparency is what makes DeFi verifiable. If you can’t inspect how the system works, it’s difficult to justify the integration to stakeholders or maintain confidence during stress.

Source code availability and licensing, verifiability (deployed contracts match reviewed code), transparency of changes (release notes, monitoring hooks), and integration rights.

Open source increases scrutiny and ecosystem confidence. Source-available approaches can balance adoption with licensing but may introduce constraints to evaluate early. Ultimately, the ability to verify that deployed code matches audited code, and that it won’t change, is what lets you make credible claims about how your product works.

In lending and yield products, risk management is the product. There is no risk-free yield. How risk is constrained matters more than the headline rate.

Risk constraints (collateral rules, oracle design, caps, circuit breakers), risk model structure (shared pool vs. isolated), role clarity (who sets parameters and what’s enforced by code), and crisis communication practices.

Monolithic protocols with shared pool models can be simpler for users but make risks contagious: one bad asset can affect everyone.

Isolated, modular protocols let you choose exactly which markets and strategies your users are exposed to, but require more expertise upfront. The key question: do you control your risk exposure, or does someone else?

The best protocol depends on your use case, risk tolerance, and operating constraints. In practice, the protocols that tend to be the best fit for integrators share a few common traits.

1. You have full ownership over the infrastructure you’re building on
2. You have full control over risk, compliance, and liquidity

The protocols that give integrators the most control tend to share common traits: immutable core contracts, governance-minimized design, modular architecture, and neutral infrastructure that doesn’t compete with the products built on top. These choices require more upfront diligence, but they pay off in predictability, ownership, and the ability to build exactly what your users need.

Jeff Bezos famously said, “Focus only on what makes your beer taste insanely better.” Any product leader’s job is to build a product that’s genuinely better for customers. DeFi infrastructure can save you significant trouble when building financial products, but only if you choose infrastructure that puts you in control.