Michaela
Ethereum co-founder Vitalik Buterin has emphasized that low-risk decentralized finance (DeFi) protocols could provide steady revenue for the network, similar to how Google Search fuels Google, while supporting Ethereum’s non-financial applications and cultural ethos.
Key points:
- Vitalik Buterin believes low-risk DeFi could provide Ethereum with steady revenue, similar to how Google Search drives Google’s profits, while supporting nonfinancial apps.
- The disconnect between revenue-generating DeFi and culturally aligned Ethereum applications has caused community tension, but stablecoin lending on platforms like Aave now offers a viable solution.
- Buterin warned that unlike Google’s ad-driven model, Ethereum must ensure any revenue-generating activity aligns with its decentralized and ethical principles, balancing financial growth with cultural values.
In a blog post on Sunday, the Ethereum co-founder suggested that low-risk DeFi could help resolve tensions within the community regarding whether revenue-generating applications align with the cultural and ethical principles that initially drew users to Ethereum.
“Historically, these two categories were very disjoint: the former was some combination of NFTs, [meme coins], and a type of defi that was backed up by temporary or recursive forces: people borrowing and lending to chase incentives provided by protocols, or a circular argument of “ETH is valuable because people use the Ethereum chain to buy and sell and leverage-trade ETH,” Buterin wrote.
He added that non-financial and semi-financial applications, including Lens, Farcaster, and Polymarket, while innovative, have seen limited adoption or generated insufficient fee revenue.
Buterin explained that this disconnect caused tension within the community, as much of its energy relied on the “theoretical hope that some application could emerge” to satisfy both financial sustainability and cultural alignment. He added that, as of this year, Ethereum now possesses such an application.
The Ethereum co-founder argued that low-risk DeFi could serve as the primary revenue driver for Ethereum, emphasizing stablecoin lending on the DeFi platform Aave, where deposit rates sit around 5% for major tokens like Tether and USDC and exceed 10% for higher-risk stablecoins.
Buterin compared this to Google, noting that while the tech giant produces “interesting and valuable things” such as its Chromium browsers, Pixel phones, and open-source AI Gemini models, the bulk of its revenue still comes from search and advertising.
However, Buterin criticized Google’s business model, arguing that its reliance on advertising revenue encourages the company to collect and centralize user data, undermining its original open-source principles and commitment to creating positive-sum outcomes.
“The cost of this kind of incongruence is even higher for Ethereum, because Ethereum is a decentralized ecosystem, and so any activity that Ethereum does cannot be a backroom decision of a few people, it must be viable as a cultural rallying point,” Buterin wrote.
Looking ahead, Ethereum’s evolution could redefine how digital networks balance profit and purpose. By prioritizing sustainable, low-risk DeFi, the ecosystem may set a new standard for combining financial growth with ethical innovation, showing that blockchain can be both economically robust and culturally aligned for years to come.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
