Vitalik Buterin said this weekend that Ethereum needs a “better decentralized stablecoin,” arguing that the next version must address three design constraints that today’s models continue to elude. His comments came alongside broader claims from MetaLeX founder Gabriel Shapiro that Ethereum is increasingly becoming a “contrarian bet” compared to optimizing much of the venture-backed cryptocurrency stack.
Framing the split in terms of ideology, Shapiro said, “It’s becoming increasingly clear that Ethereum is a counter bet to most things crypto VCs are betting on,” listing “gambling,” “CeDeFi,” “custodial stablecoins,” and “neobanks” as centers of gravity. In contrast, he argued, “Ethereum is tripling its efforts to disrupt power in order to enable the sovereign individual.”
Why Ethereum lacks a decentralized stablecoin
Buterin's criticism of stablecoins begins with what needs to be stabilized. “It’s okay to track the USD in the short term,” he said, but suggested that the longer-term version of “national resilience” refers to something that doesn’t rely on a single fiat “price indicator.”
“It is good to track the USD in the short term, but part of the national resilience vision must also be independence from price indicators,” Buterin wrote. “What if the 20-year timeline becomes even slightly over-inflated?”
This premise shifts the stablecoin problem from simply maintaining a peg to building a reference index that can survive macro regime changes. In Buterin’s framing, this is one of the “problems.” Even if USD tracking remains handy in the near term, at least it identifies an index that is “better than the USD price” as a North Star.
The second issue is governance and oracle security. Buterin argued that decentralized oracles “must not be able to be captured by large pools of funds” or the system is forced to make unattractive trade-offs that ultimately impact users.
“Without (2), you have to guarantee capture cost > protocol token market cap, which in turn means protocol value extraction > discount rate, which is very bad for users,” he wrote. “This is a big part of why I constantly criticize financialized governance: there is essentially no defense/offensive asymmetry, and high levels of extraction are the only way it can be stable.”
He linked this to long-term discomfort with token holder-centric control structures similar to influence markets. In his view, “financialized governance” is a trend toward systems that must continually extract value to defend themselves, rather than relying on structural advantages that make attacks meaningfully more difficult than normal operations.
The third problem is mechanical. Staking returns compete with decentralized stablecoins for capital. If stablecoin users and collateral providers are implicitly giving up a few percentage points of return compared to ETH staking, Buterin called that “very bad” and suggested it would be a persistent headwind unless the ecosystem changes how return, collateral and risk interact.
He described what he described as a map of the 'solution space', but stressed that it was 'not a guarantee'. These paths ranged from compressing staking returns to “hobbyist levels,” to creating categories of staking with similar returns but without comparable risk reduction, to creating “slashable staking compatible with its utility as collateral.”
Buterin also pointedly explained what “risk reduction” actually means in this context. “If you try to reason this out in detail, remember that the 'cut risk' you need to be wary of is self-contradiction and engaging in the wrong side of inert leakage, namely the 51% censorship attack. Typically, I think we think too much about the former and not enough about the latter.”
Constraints also affect liquidation dynamics. He pointed out that stablecoins “cannot be secured by a fixed amount of ETH collateral.” This is because large losses require active rebalancing and any design that generates returns from staking must take into account how returns may turn off or change during times of stress.
At press time, ETH was trading at $3,118.
Featured image created with DALL.E, chart from TradingView.com
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