Buterin on the Future of Stablecoins in DeFi

Buterin on the Future of Stablecoins in DeFi

Vitalik Buterin, the founder of Ethereum, proposed ideas for the development of algorithmic stablecoins, classifying them as ‘true’ DeFi (decentralized finance). He aims to reduce reliance on the US dollar in favor of more diverse indices.

The well-known developer shared his thoughts on algorithmic stablecoins, stating that they are true manifestations of DeFi, unlike the income-generating processes from centralized coins through lending systems. His comments, made on Twitter, emphasized the need to rethink current approaches.

Paths for Stablecoin Development

Buterin identifies two potentials for the evolution of stablecoins. The ‘Easy Mode’ involves creating stable coins backed by Ethereum. This provides benefits in risk distribution among market participants, such as market makers, and allows the mechanism to remain resilient even if most of the liquidity comes from holders of CDP (collateralized debt positions).

Complex Mode and RWA

The ‘Complex Mode’ focuses on real-world assets (RWA - Real World Assets), implying strict adherence to criteria such as high diversification, over-collateralization, and limitation on the share of any one asset. This is necessary for a stablecoin to withstand the collapse of one of the elements of RWA reserves.

Moving Away from the Dollar

Buterin believes that the future lies in stablecoins that are not pegged to fiat currency but oriented towards generalized market indices. Such a transition could radically change the structure and resilience of financial systems.

Responses to Recent Remarks

In addition to this vision, Vitalik recently criticized methods for creating new EVM networks. In his statements, he argued that the initial mechanisms of second-layer solutions had lost relevance, sparking debate among L2 developers.

Conclusion

Buterin offers innovative ideas for the future development of the crypto industry.

• Strengths: New approaches could create a more resilient financial system.
• Risks: The complexity of implementation and the need for strict asset control.
• Opportunities: Expanding the use of algorithmic stablecoins.
• Threats: Potential instability with changes in indices and RWA.

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