Low-risk DeFi, not memecoins, can best sustain Ethereum’s economy, co-founder Vitalik Buterin says

Ethereum co-founder Vitalik Buterin called on the Ethereum community to put a stronger focus on low-risk decentralized finance protocols, arguing such protocols can economically sustain less profitable but still important applications on the network, in a new blog post published Sunday. 

In the post, Buterin likened low-risk decentralized finance — namely payments, savings, fully collateralized lending, and other well-understood applications — to Google’s advertising business, which accounted for more than three-quarters of the company’s revenue in 2024. Google is able to sustain less profitable yet “interesting and valuable…for the world” product lines because of the revenue from ads, Buterin argued. 

“Low-risk defi can play a similar role for Ethereum,” Buterin wrote. “Other applications (including non-financial and more experimental applications) are crucially important for Ethereum’s role in the world and for its culture, but they do not need to be looked to as revenue generators.”

Buterin said in the past he was suspicious of DeFi, arguing early risks were too high for sustainable use cases and that trading on speculative assets, or risky yield farming, made up too much of the industry’s focus. Buterin pointed out that Yuga Labs’ Otherdeed sale in 2022 was one of the single largest days in fees for Ethereum, after a poorly optimized smart contract led to a gas war between bidders. 

Yet as risks have decreased, and global regulators have evolved, hacks and losses are “increasingly being pushed out to further edges of the ecosystem where users are more experimental and speculative,” Buterin wrote. Though tail risks are still worthy of concern, Vitalik argues, “for many people worldwide the tail risks of tradfi are now greater than the tail risks of defi.” 

Buterin’s blog post does not mention any other blockchain by name, though he implicitly implicitly contrasts Ethereum with ecosystems where memecoins dominate fee revenue.

“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 not embarrassing,” Buterin wrote (emphasis in original). “It’s just not possible to say with a straight face you are excited about the ecosystem because it’s positively changing the world, if its single largest application is political memecoins.”

Low-risk DeFi can also eventually evolve into other future applications, such as undercollateralized reputation-based lending, integrating prediction markets with existing DeFi structures, and moving away from USD adoption toward other stable forms of value, like “flatcoins,” Buterin wrote.

“Low-risk defi is already supporting the Ethereum economy, it is making the world a better place even today, and it is synergistic with many of the more experimental applications that people on Ethereum are building,” Buterin concluded. “It is a project that we can all be proud of.”

Buterin’s blog post follows significant changes to the Ethereum Foundation earlier this year. The organization, now run by co-Executive Directors Hsiao-Wei Wang and Tomasz K. Stańczak, has this year released a “Trillion Dollar Security” initiative, outlined an end-to-end privacy roadmap, and overhauled its grants program to reduce burn. 

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