Ethereum co-founder Vitalik Buterin stated that income from low-risk decentralized finance (DeFi) protocols can provide economic stability for the network—similar to how Google Search supports Google—while allowing non-financial applications to uphold Ethereum's cultural values.

Buterin mentioned in a blog post last Saturday that low-risk DeFi could address an "important tension" within the Ethereum community, which is whether applications that generate sufficient income to economically sustain the ecosystem align with the cultural and ethical values that initially attracted people to Ethereum.

He noted that the former has been a mix of non-fungible tokens, meme coins, and speculative trading, while non-financial and semi-financial applications that reflect Ethereum's cultural values either struggle to gain widespread adoption or have not generated enough fees.

"This disconnect has caused a lot of disharmony in the community," Buterin said, then argued for low-risk DeFi to become the primary fee generator for Ethereum. One example emphasized by Buterin is the deposit interest rates for stablecoin lending on the DeFi protocol Aave, where rates for blue-chip assets like USDT and USDC hover around 5%, while high-risk stablecoins exceed 10%.

Similarly, Buterin pointed out that Google has done many "interesting and valuable things"—such as its Chromium series of browsers, Pixel phones, open-source AI Gemini models, and more—but the revenue it earns from these products is just a small fraction compared to what it generates from search and advertising.

At this point, the total locked value (TVL) in Ethereum DeFi recently surpassed $100 billion for the first time since early 2022. During the 2022-2023 bear market, the entire ecosystem's DeFi TVL saw a significant decline, and the TVL data has lagged behind the performance of top layer-one tokens in this bull market.

However, with increasing regulatory momentum, DeFi has recently rebounded, particularly with the Digital Asset Market Structure Bill, which is expected to further drive DeFi adoption. A recent survey by the DeFi Education Fund found that over 40% of Americans would be willing to embrace DeFi if stronger regulations were established.

Due to its decentralized nature, Ethereum has the potential to "do better than Google." Unlike Google, Ethereum's decentralized structure better positions low-risk DeFi to align financial success with ethical outcomes, creating harmony between "doing well" and "being a good person."

Buterin criticized Google's incentive model, pointing out that advertising revenue drives the company to hoard user data, which conflicts with its original spirit of open-source and positive-sum games.

While low-risk DeFi is often aimed at making it easier to access dollars—especially for those in low-income and high-inflation countries—Buterin hopes to see other innovations that provide economic support for Ethereum.

Buterin proposed the idea of building crypto assets that track a basket of currencies and stablecoins directly based on the consumer price index.

Related: Jimmy Song criticizes Bitcoin Core developers' "fiat" mentality on the OP_Return issue

Original article: “Vitalik: Low-risk DeFi can provide economic stability for Ethereum, just as search does for Google”

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