Vitalik Buterin, co-founder of Ethereum, mentioned that revenue from low-risk decentralized finance (DeFi) protocols could offer economic stability to the network, similar to how Google Search supports Google, while ensuring that nonfinancial applications uphold Ethereum’s cultural values.
Low-risk DeFi could resolve “important tensions” within the Ethereum community regarding whether applications that generate sufficient revenue to sustain the ecosystem align with the cultural and ethical principles that initially attracted users to Ethereum, Buterin stated in a blog post on Saturday.
The former consists of nonfungible tokens, memecoins, and speculative trading, while the nonfinancial and semifinancial applications that reflect Ethereum’s cultural values have either struggled to achieve widespread adoption or have not generated sufficient fees, he noted.
“This disconnect has caused significant dissonance in the community,” Buterin remarked, advocating for low-risk DeFi as the primary revenue generator for Ethereum. He pointed out that deposit rates for stablecoin lending on DeFi protocol Aave hover around 5% for major coins like Tether (USDT) and USDC (USDC), with higher-risk stablecoins offering rates above 10%.
Buterin also observed that Google engages in various “interesting and valuable endeavors”—including its Chromium browser family, Pixel phones, and its open-source AI Gemini models—yet the revenue from these products is just a fraction of what it earns through search and advertisements.
Recently, the total value locked in Ethereum DeFi exceeded $100 billion for the first time since early 2022. DeFi TVL experienced significant declines during the 2022-2023 bear market, lagging behind the performance of leading layer 1 tokens in the current bull market.
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Recently, DeFi has seen growth, spurred by increasing regulatory momentum, especially the Digital Asset Market Clarity Act, which is expected to further boost DeFi adoption. A survey from the DeFi Education Fund revealed that over 40% of Americans are open to DeFi if stronger regulations are established.
Ethereum has the potential to “do much better” than Google
Ethereum has the opportunity to “do much better” than Google due to its decentralized nature. Unlike Google, Ethereum’s decentralized framework positions low-risk DeFi to harmonize financial success with ethical outcomes, balancing “doing well” with “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 embarrassing.”
Buterin criticized Google’s incentive model, pointing out that advertising revenue drives the company to accumulate user data, conflicting with its original open-source and positive-sum ideals.
Vitalik advocates for basket currencies, flatcoins
While low-risk DeFi often focuses on facilitating easier access to the US dollar—especially for those in low-income and high-inflation countries—Buterin envisions additional innovations that could provide economic backing for Ethereum.
He proposed developing crypto assets that track a basket of currencies and flatcoins directly linked to consumer price indices.
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