During his keynote at the EthCC conference in Paris, Ethereum co-founder and top developer Vitalik Buterin pleaded for the Ethereum community to innovate beyond the boundaries of decentralized finance.

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

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

Buterin outlines several non-financial uses for Ethereum, including decentralized social media, identity verification and attestation, and retrospective funding of public goods.

“Going beyond DeFi is not against DeFi. i really think so […] Buterin said the most interesting Ethereum applications will combine financial and non-financial elements.

“Maybe in a few years we will have a lot of interesting things […] that just offers all kinds of real and very diverse value, not just within the Ethereum ecosystem but beyond, ”he added.

Buterin has started financing public goods. In a July 21 co-authored blog post by Buterin, the second-level scaling solution, Optimism, pledges to fund open source development through a retrospective reward protocol, with Optimism assigning any profits generated by the sequence to the initiative.

Why DeFi?

Buterin attributed the Ethereum community’s interest in DeFi to two main factors.

First, Vitalik claims that “finance is only where centralized technology is most attractive,” and concludes that finance offers greater scope for decentralization than other centralized industries:

“I can send you a targeted email and you will 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 transfers don’t work like that. “

Buterin also highlighted the prevalence of high fees leading the sector to financial applications, noting:

“Degens 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 can’t work when you have a $ 5.22 transaction fee.

However, Buterin pointed out that the challenge of high transaction fees “is currently being solved by Ethereum’s burgeoning Layer 2 network ecosystem.”

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Now, with work on lowering transaction costs for Ethereum, Buterin says it is time to look into how Ethereum can be used to solve other problems, stating, “The Ethereum ecosystem needs to go beyond mere token creation that facilitate trading with other tokens. “

“If you just take this tight thing as DeFi and keep pushing it to infinity […] You only get tokens that bring you profits from farming other currencies, which are financial derivatives alongside other yield farming tokens, ”he said.

Noting that financial derivatives offer some value to the sector, Buterin cautioned about the systemic risk associated with complex derivatives and concluded, “Don’t just do it. DeFi”.

“These are worth up to first and second grade, […] But from the sixth grade on you increase the financial instability and the risk that the whole thing will fall apart. “