Defi today is successful because of money legos. Like actual legos, a money lego is any financial product that others can build on top of.
Debt is an example many are familiar with. Dai represents debt. It is also a fungible token with common properties that can be locked into any other protocol that accepts tokens with those properties. Uniswap allows anyone to create a pool, allowing people to trade between Dai and another token. Just like a Lego block, you can stack Dai on top of Uniswap to enable anyone to trade debt. And again, in turn, the liquidity provided into a Uniswap pool is represented as another standard token, allowing the holder to retrieve liquidity back out from the pool if they wish. Another money lego is born!
Another common standard in defi is the non-fungible token standard. "Non-fungible” means that each token within a type can be different from each other. Typical examples today are art, photos, videos, and audio. Prominent examples include Crypto Punks and Bored Ape Yacht Club: each crypto punk is part of the same collection, but each is different. Also, each Crypto Punk is easily bought, sold, and transferred.
In the Trustless Currency Protocol (Tcp), users can lock Eth collateral and borrow Hue debt. However, Tcp also makes each position a freely transferable NFT. This means that users can transfer their debt position between accounts they own, such as to a more secure wallet. The user could also list their position for sale and sell it in an NFT marketplace, just like a Crypto Punk. Someone could also build a new financial product that packages many debt positions into an entirely new financial product. The possibilities are endless.
By tokenizing a position's debt and collateral into an NFT, Tcp positions become a new money lego for use in the future of defi.