Vitalik Buterin believes that although Ethereum is dominated by DeFi applications, non-financial utilities are the most interesting part of the general blockchain vision.
Written by: SAMUEL HAIG
Translation: Porridge Overnight
According to news on July 22, at the EthCC conference in Paris recently, Ethereum co-founder Vitalik Buterin mentioned in his keynote speech that financial applications (DeFi) currently dominate the Ethereum community, but in his opinion, non-financial Utilities are the most interesting part of the general blockchain vision.
Vitalik stated:
“Being defined by DeFi is better than not being defined, but it needs to go further.”
Subsequently, Vitalik mentioned several non-financial applications of Ethereum, including decentralized social media, identity verification & authentication, and traceable public goods financing.
“Beyond DeFi is not against DeFi. In fact, I think the most interesting Ethereum application will combine financial and non-financial elements.”
He also added:
“Maybe in a few years, we will have a lot of really exciting things […], they are not only in the Ethereum ecosystem, but also outside the Ethereum ecosystem, and they will be all kinds of things. Such people provide real value.”
It is reported that Vitalik has begun to explore the financing of public goods. In a blog post he co-authored with the Optimism team recently, the expansion team Optimism promised to fund open source development through a traceable reward agreement.
Why is DeFi in the first place?
Vitalik attributed the attention of the Ethereum community to DeFi to two main factors.
First of all, he believes that finance is the area that needs improvement most at the moment. He said:
“I can send you a centralized email, and you will receive it within 1 second. Of course, maybe every intelligence agency can read this email, but at least you can read it after a second. This is not how international bank wire transfers work.”
Vitalik also emphasized that in the process of promoting the development of the industry to the financial application field, there is a widespread phenomenon of excessive fees. He pointed out:
“DeFi in-depth participants (including degens, apes, orangutans) can bear this kind of cost, but if we start to discuss a decentralized social media, that is, every tweet becomes an NFT, then every transaction pays The US$5.22 fee just won’t work.”
He then added that the challenge of high fees is being solved by the growing Ethereum layer 2 ecosystem.
With the reduction of transaction costs on the Ethereum network, Vitalik asserted that it is time to explore how to use Ethereum to solve other problems. He said:
“The Ethereum ecosystem must expand, not just create tokens that help other token transactions.”
Although noting that financial derivatives provide some value to the industry, he warned of the systemic risks associated with complex derivatives. He concluded:
“We can’t just focus on DeFi, these things are valuable in the first and second layers, […] but once you reach the sixth layer, you actually increase the risk of financial instability and the collapse of the entire system. “
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