In a recent blog post, Ethereum co-founder Vitalik Buterin argued that revenue from low-risk decentralized finance (DeFi) protocols could provide the Ethereum network with economic stability, much like how Google’s search functionality supports its broader operations. He suggested that this approach would also allow nonfinancial applications to remain true to the cultural values that initially attracted users to the Ethereum ecosystem.
Buterin pointed out existing tensions within the Ethereum community over the balance between revenue-generating applications, which have largely come from areas like nonfungible tokens (NFTs), memecoins, and speculative trading, and those nonfinancial or semi-financial apps that reflect Ethereum’s foundational values. The latter have either struggled to gain traction or failed to generate substantial fees, resulting in dissonance within the community.
He emphasized that low-risk DeFi could serve as a crucial revenue generator for Ethereum, offering a stabilizing influence. For instance, he referenced current deposit rates on the DeFi protocol Aave, where lending rates for popular stablecoins such as Tether (USDT) and USD Coin (USDC) hover around 5%, while those for riskier stablecoins can exceed 10%. This calls into question the sustainability of the existing revenue models heavily reliant on speculation.
Furthermore, Buterin drew an analogy with Google, highlighting that while the tech giant engages in many valuable initiatives—like its Chromium browsers, Pixel devices, and open-source AI models—the majority of its revenue is still derived from search and advertising. In light of this, he asserted that Ethereum could provide an even more favorable environment due to its decentralized nature, which allows for better alignment between financial success and ethical outcomes. He noted that for revenue-generating applications in the Ethereum ecosystem, it is essential that they function without being “actively unethical or embarrassing.”
Buterin also voiced criticism of Google’s incentive structure, which he believes compromises user privacy in pursuit of advertising revenue, creating a conflict with the ethical values that initially drove its mission. In contrast, he envisions low-risk DeFi as a pathway to harmonize “doing well” with “being good.”
As the total value locked (TVL) in Ethereum DeFi recently crossed the $100 billion mark—a significant rebound from the setbacks experienced during the bear market of 2022-2023—Buterin’s advocacy for low-risk DeFi comes at a fortuitous time. Regulatory developments, like the Digital Asset Market Clarity Act, are expected to further bolster DeFi’s adoption. A survey from the DeFi Education Fund revealed that over 40% of Americans would consider engaging with DeFi if more robust legal frameworks were established.
Buterin also proposed additional innovations tailored to enhance Ethereum’s economic stability. He introduced the ideas of creating crypto-assets that track a basket of currencies and flatcoins linked directly to consumer price indices, providing alternatives that extend beyond straightforward access to the US dollar. Through these initiatives, he contended that Ethereum has the potential to transcend the traditional revenue models exemplified by giants like Google, thereby fostering a more ethical financial ecosystem.
