Ethereum co-founder Vitalik Buterin has said that low-risk decentralized finance protocols could contribute revenue to Ethereum, providing the network with the needed economic stability. In a blog post released on Saturday, Buterin said that it could be like the relationship between Google Search and Google.
According to the Ethereum co-founder, the low-risk DeFi protocols could also do so much more, noting that they could allow nonfinancial apps to uphold Ethereum’s cultural values.
“Low-risk DeFi could address ‘important tensions’ in the Ethereum community over whether apps that bring in enough revenue to economically sustain the ecosystem align with the cultural and ethical values that brought people to Ethereum in the first place”, Buterin said in the blog post.
Vitalik Buterin wants low-risk DeFi to contribute to Ethereum
The former has been a combination of non-fungible tokens, memecoins, and speculative trading. Meanwhile, Buterin mentioned that the semi-financial and non-financial apps that have reflected Ethereum’s cultural value are either struggling to gain widespread adoption or have not generated enough fees. “This disjointness created a lot of dissonance in the community,” Buterin said.
One example Buterin made was the deposit rates for stablecoins lending on DeFi protocol Aave, which is presently around 5% for blue-chip tokens like Tether and USDC, and above 10% for tokens with higher risks.
In the same way, he mentioned that Google does so many interesting and valuable things, noting its Chromium family of browsers, Pixel phones, open-source AI Gemini models, and some others, but the revenue they make from those products is little compared to what they make from search and advertisements.
Buterin’s statement comes as the total value locked on Ethereum DeFi recently crossed above $100 billion for the first time since 2022. Defi TVL dropped drastically across the ecosystem during the 2022-2023 bear market, with TVL figures now trailing the performance of top layer 1 tokens in this bull market.
However, there has been chatter in the DeFi industry, thanks to an increase in regulatory momentum, especially the Digital Asset Market Clarity Act, which has been predicted to push the adoption of the DeFi industry.
Ethereum can do much better than Google, Vitalik says
A recent survey from the DeFi Education Fund discovered that over 40% of Americans are open to DeFi if stronger laws are put in place. The survey, which was conducted by Ipsos, found “emerging awareness of cryptocurrency and decentralized finance as many Americans express frustrations with current financial institutions’ ability to deliver security, personalized control and flexibility,” according to Ipsos Public Affairs vice president Alec Tyson.
Meanwhile, Buterin noted that Ethereum has the potential to do much better than Google due to its decentralization. He claims that, unlike Google, the decentralized structure that Ethereum boasts positions low-risk DeFi to align success with ethical outcomes, creating a relationship between doing well and being good.
“The revenue generator does not have to be the most revolutionary or exciting application of Ethereum. But it does need to be something that is at least not actively unethical or not embarrassing,” he added.
Buterin also spared a little criticism for Google, noting that its incentive model through advertising pushes the company to hoard user data, conflicting with its original open-source and positive ethos.
He mentioned that while low-risk DeFi is often about enabling easier access to the United States dollar, particularly those in low-income and high-inflation countries, he would love to see innovations that provide economic support for Ethereum. Finally, Buterin floated the idea of building assets that track different currencies and flatcoins that are based on consumer price indices.
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