Vitalik faces backlash for downplaying DeFi’s role in Ethereum’s growth

Community backlash

The ongoing existence of the defi market is downstream of the existence of the ETH market, which means that while defi may be great it’s fundamentally capped and can’t be the thing that brings crypto to another 10-100x adoption burst.

Buterin’s views on DeFi

Remove DeFi from ETH and its value would be 80% less.
He acknowledged that while many applications, like those from the 2021 liquidity farming boom, were temporary and lacked sustainability, he favors those that are both sustainable and fully decentralized.
Buterin highlighted decentralized exchanges, decentralized stablecoins like RAI, and prediction markets like Polymarkets as examples of applications he supports.

He stressed that the intersection of decentralized finance with other decentralized technologies will be crucial for the crypto industry to uphold its core values, including privacy.

Vitalik Buterin has been criticized by the crypto community for his comments on decentralized finance (DeFi).

Cheong pointed out DeFi’s contribution in helping to drive Ethereum’s value to its current height, stating: [Buterin] doesn’t really understand the usecase and sector that drive value to ETH and make it worth $330b.
Similarly, Sam Kazemian, the founder of Frax Finance, suggested that Buterin was out of touch with the current dynamics of DeFi and stablecoins. He said the Ethereum co-founder arguments relied on outdated assumptions.
Rhett Shipp, founder of Gravita Protocol, also argued that DeFi was pivotal to ETH’s growth. According to him, the sector accounts for the majority of Ethereum’s usage and gas fees and helps to drive ETH’s value because it is heavily used as collateral in DeFi.
Shipp also countered Buterin’s critique of unsustainable high yields in DeFi, noting that early subsidies are a valid strategy to encourage adoption.

In an Aug. 25 post on X, Buterin expressed doubts about DeFi’s potential to drive significant growth in the crypto sector.