Ethereum co-founder Vitalik Buterin stated that revenue from low-risk decentralized finance protocols might provide the network with economic stability—similar to how Google Search bolsters Google—while allowing nonfinancial applications to uphold Ethereum’s cultural principles.
Low-risk DeFi could help address “significant tensions” in the Ethereum community regarding whether applications generating sufficient revenue to sustain the ecosystem align with the cultural and ethical values that initially attracted people to Ethereum, Buterin mentioned in a Saturday blog post.
He indicated that the former primarily comprises nonfungible tokens, memecoins, and speculative trading, whereas the nonfinancial and semifinancial applications reflecting Ethereum’s cultural values have either struggled for widespread adoption or haven’t generated adequate fees.
“This disjointedness has led to significant dissonance within the community,” Buterin asserted, advocating for low-risk DeFi as Ethereum’s principal fee generator. He cited deposit rates for stablecoin lending on the DeFi protocol Aave, hovering around 5% for notable coins like Tether (USDT) and USDC, and exceeding 10% for riskier stablecoins.
Buterin also highlighted that Google undertakes many “interesting and valuable things”—such as its Chromium browser family, Pixel phones, and its open-source AI Gemini models—yet the revenue from these products constitutes a small fraction of its earnings from search and advertisements.
This comes as the total value locked in Ethereum DeFi recently exceeded $100 billion for the first time since early 2022. DeFi TVL significantly decreased across the ecosystem during the 2022-2023 bear market, with TVL figures largely trailing the performances of leading layer 1 tokens in the current bull market.
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Nonetheless, DeFi has gained traction recently due to increased regulatory momentum, particularly with the Digital Asset Market Clarity Act, anticipated to further boost DeFi adoption. A recent survey from the DeFi Education Fund revealed that over 40% of Americans would consider DeFi if more robust laws were enacted.
Ethereum has the potential to “do much better” than Google
Ethereum could “perform significantly better” than Google due to its decentralization. Unlike Google, Ethereum’s decentralized framework allows low-risk DeFi to align financial success with ethical results, fostering harmony between “doing well” and “being good.”
“The revenue generator doesn’t have to be the most innovative or thrilling application of Ethereum. However, it must be something that is at least not actively unethical or embarrassing.”
Buterin criticized Google’s incentive model, noting that advertising revenue prompts the company to accumulate user data, which conflicts with its original open-source and positive-sum ethos.
Vitalik advocates for basket currencies, flatcoins
While low-risk DeFi typically focuses on simplifying access to the US dollar—especially for low-income and high-inflation countries—Buterin envisions other innovations that could provide economic support to Ethereum.
He proposed the development of cryptoassets that track a basket of currencies, along with flatcoins based directly on consumer price indices.
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