Vitalik Buterin: Not DeFi, but non-financial utilities are the most interesting part of Ethereum

During his keynote address at the ongoing EthCC conference in Paris, Ethereum co-founder Vitalik Buterin “bedded” the Ethereum developer community to innovate beyond DeFi.

EthCC Conference 2021 in Paris

Describing new non-financial utilities as “the most exciting part of the vision of general-purpose blockchains,” Buterin complained that financial applications are currently dominating the Ethereum space.

“Defined by DeFi is better than nothing. But it has to go further. “

Buterin outlines several non-financial uses for Ethereum, including a decentralized social network, identity verification, attestation, and investing in public goods.

“Going beyond DeFi is not against DeFi. I really think that the most interesting uses on Ethereum will combine financial and non-financial elements, ”said Buterin.

“Maybe in a few years we will have a lot of really interesting things that offer all kinds of real and diverse value to everyone, not just within the Ethereum ecosystem but beyond,” he added.

Buterin has started funding the public goods sector. In one post In a July 21 co-authored blog by Buterin, Layer 2 scaling solution Optimism pledges to fund open source development through a retrospective reward protocol, with Optimism committing to both of the profits generated by sequencing for the initiative .

* Public good is what public economics calls goods that generate positive externalities. These are goods, the fact that a person enjoys the benefits created by these goods does not prevent others from enjoying their benefits at the same time. This helps to distinguish public goods from private goods, i.e. goods that, once consumed by one person, cannot be consumed by another.

Good radio and television programs, for example, are not competitive when it comes to consumption. They can be viewed by many people at the same time. If someone else is listening to the radio, it does not affect the value of others.

Why not just DeFi?

Buterin believes the Ethereum community’s interest in DeFi has two causes.

First, he said that “finance is where centralized technology is most attractive to make money” and concludes that finance offers greater scope for decentralization than other centralized industries:

“I can send you a centralized email (like Gmail or Yahoo Mail), you get it in a second. And sure, maybe many intelligence agencies will read it, but at least you can read it, and at least you can read it in a second. International bank lines don’t work like that. “

Buterin also highlighted the prevalence of high gas charges that are driving the sector to financial applications, noting:

“Anything can pay for it, monkeys can pay for it, orangutans can pay for it. But if we’re talking about a decentralized social network where every tweet becomes an NFT, that won’t work if the transaction fee is $ 5.22. “

What Vitalik means is that people are always willing to pay for financial costs (gas) because it may be profitable in the future instead of being willing to pay the cost of a charitable application.

However, Buterin says the high transaction fee challenge is currently being addressed by Ethereum’s growing Layer 2 network ecosystem.

With work being done to lower gas fees for Ethereum, Buterin said that now is the time to look into how Ethereum can be used to solve other problems, stating:

“The Ethereum ecosystem needs to go beyond the mere creation of tokens that help trade other tokens.

If you just take this limited thing that is DeFi and you push it on to infinity, you will only get tokens that will bring you profits from farming other tokens that are financial derivatives between farming tokens.

Noting that financial derivatives offer some value to the sector, Buterin cautioned about the systemic risk associated with complex derivatives and concluded:

“These go all the way down to Layer-1 and Layer-2, but when you get to Layer-6, you really add financial instability and risk the whole thing falling apart.”

Cong Tu Ngang

According to Cointelegraph

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