Following accusations that the Ethereum network does not care about decentralized finance (DeFi), Vitalik Buterin has downplayed the criticisms over alleged neglect. According to the Ethereum co-founder, DeFi has been an important part of Ethereum’s ecosystem core principle.
Frustrations over Ethereum’s DeFi Position
Discussions about DeFi gained traction on the crypto social media space after yield farming creator Kain Warwick appeared on a crypto talk show last weekend. During the show, Warwick expressed his dissatisfaction with the way the Ethereum Foundation has acknowledged DeFi’s contribution to the Ethereum ecosystem.
He expressed his displeasure regarding the Ethereum Foundation’s lack of recognition for DeFi’s contributions to the ecosystem. Warwick acknowledged that “years of frustration” went into creating these posts.
While praising Ethereum co-founder Vitalik Buterin for his accomplishments and calling him an “incredible person who has done incredible things,” Warwick expressed concern that the DeFi community’s mounting annoyance has been stoked by Buterin’s position on DeFi, which suggests that DeFi should be given less priority.
Buterin’s Response to Warwick
Online users responded fervently to Warwick’s remarks, with some endorsing his point of view. A user observed that there is a closer relationship between DeFi’s value and the Ethereum network.
An X user argued that it is incoherent for Buterin to support the centralized stablecoin USDC while he pays less attention to DeFi, despite the sector’s significant contribution to the Ethereum network.
In response, Buterin underlined his support of the fundamental ideas of DeFi, like permissionlessness, decentralization, and value applications that are practical and long-lasting. Buterin also stressed how much he values decentralized stablecoins like RAI and decentralized exchanges (DEXes), both of which he frequently uses.
However, he expressed contempt for programs whose appeal stems from unsustainable elements. He cited the 2021 liquidity farming frenzy as an illustration. He explained that this frenzy was fueled by transient token issuances that lacked longevity.
The Future of DeFi in the Ethereum Ecosystem
Buterin predicted that in the future, DeFi by itself would not be enough to propel the Ethereum ecosystem’s evolution, as there would be other necessary and more extensive innovations. Meanwhile, the Ethereum Foundation made a noteworthy financial move amidst the discussion surrounding the position on DeFi.
It moved roughly $97 million worth of ETH to a Kraken exchange deposit wallet address on August 23. After a heated online discussion regarding the purpose of this transaction, the executive director of the Ethereum Foundation clarified that this was a standard procedure for the organization’s treasury management. He further explained that it is a move that guarantees the right distribution of funds.
Defending the Decentralized Prediction Market
In another development, Buterin has also been involved in the defense of decentralized prediction markets. Recently, these markets have come under increased regulatory scrutiny from the US Commodity Futures Trading Commission (CFTC).
By classifying prediction markets as gambling platforms, the CFTC’s proposed regulations could restrict the way in which they operate. However, Buterin disagreed with this categorization, claiming that it oversimplifies the function and advantages of prediction markets.
Buterin stated that prediction markets, such as Polymarket, are useful “social epistemic tools,” offering insights into future events based on market predictions.
Opposing CFTC’s Proposal
Moreover, prominent personalities in the cryptocurrency space have opposed the CFTC’s proposal. Gemini co-founder Cameron Winklevoss argued that decentralized prediction markets provide a special public good. They force users to stake actual money and produce forecasts that are more accurate than those from conventional sources.
In his insights, Coinbase Chief Legal Officer Paul Grewal expressed concerns about the CFTC’s proposal’s vague definition of “gambling.” He pointed out that it might lead to needless limitations on platforms like Polymarket, which have entirely different functions from traditional gambling establishments.
Despite these regulatory difficulties, Polymarket is still doing well. According to recent data, the platform’s trading volume exceeded $390 million in August, indicating a notable increase in user engagement.
Furthermore, new firms joining the prediction market are recording good performances. For instance, the decentralized exchange on Solana called BET (Bullish on Everything) attracted millions of dollars in liquidity on its first day of operation. BET has become well-known for its focus on the results of US elections.
