Ethereum co-founder Vitalik Buterin has published a significant shift in his stance toward decentralized finance (DeFi), advocating for low-risk DeFi applications as the fundamental economic engine for the Ethereum ecosystem, comparable to Google’s search and advertising business. In his latest article, Buterin acknowledges his previous skepticism toward DeFi, stating that circumstances have evolved to make low-risk DeFi both viable and essential. He emphasizes that while regulatory challenges and technical risks previously limited DeFi’s potential, the ecosystem has matured to support more sustainable applications. Buterin identifies a historical tension within Ethereum between applications that generate sufficient economic activity to sustain the ecosystem and those that fulfill the original vision attracting users to the platform. He argues that low-risk DeFi now bridges this gap by providing both economic sustainability and alignment with Ethereum’s core values. The Ethereum founder draws a direct analogy to Google’s business model, where search and advertising generate primary revenue while other innovative projects contribute to the company’s broader mission. Similarly, low-risk DeFi can support Ethereum’s economy while non-financial and experimental applications continue to drive innovation. Buterin defines low-risk DeFi as encompassing payment systems, savings mechanisms, synthetic assets, fully-collateralized lending, and exchange capabilities between these assets. He highlights two key advantages: these applications provide irreplaceable value to Ethereum users, and they align culturally with the Ethereum community’s objectives. Regarding his changed perspective, Buterin cites improved protocol security and reduced systemic risks as enabling factors. While acknowledging that attacks and losses still occur in DeFi, he notes they are increasingly concentrated in more experimental and speculative areas of the ecosystem. The article emphasizes that low-risk DeFi naturally complements many future applications, including reputation-based lending, prediction markets for hedging, and alternative stable value forms beyond dollar-pegged stablecoins. Buterin concludes that focusing on low-risk DeFi enables better economic sustainability while maintaining cultural and value consistency within the Ethereum ecosystem.
