Ethereum (ETH) is more than decentralized finance (DeFi) and the focus on price, argued its co-founder Vitalik Buterin. He said that it is primarily about utility and the creation of decentralized services that combine finance and nonfinance.
As you may have guessed from current DeFi events, Ethereum and projects built with different blockchains aren’t just about price. Buterin stated that the goal of the crypto space is not to have more utility, more projects and more ecosystems that keep building different types of utility. He made this statement at the EthCC conference held in Paris on July 20-22.
Ethereum is a cryptocurrency that focuses mainly on finance. The perception is that Ethereum is dominated and defined by DeFi. Buterin stressed that this is not a bad thing and said that it is not the only thing Ethereum is trying to do.
He said that Ethereum’s vision, as well as much of crypto, was to “take decentralization, trust minimization, and mechanism design experimentation far outside finance.”
He described this as the most fascinating part of the vision for general purpose blochchains.
DeFi’s dominance is due to two main reasons, according to Buterin.
- Finance is where central technology “sucks most”. However, “centralized other items,” which also have problems, continue to grow and become more prominent.
- Transaction fees are high and some people can afford them, but there are certain areas, such as decentralized media, that cannot work with high fees.
Buterin stated that the fee problem is being addressed. Rollups are one solution, and they can be combined with sharding to further increase scalability.
He stated that now is a good time to start thinking about other ways to use Ethereum and to go beyond DeFi. Non-fungible tokens (NFTs) and ENS names are two examples of non-financial creations you can see.
If you look at the short-term, there are two things that must be achieved for new projects.
- Alignment with values: It must be something the community can support doing.
- Alignment with your needs: It must be something you can use.
Buterin says that building out the Ethereum social media network is one of the most important tasks. Crypto technology can solve many of the major problems plaguing centralized social networks. It brings credibility neutrality and resistance to censorship to the table, among other features.
Etherum login can also be used to log into other services like Google and Twitter. Buterin stated that these central login providers are the “worst” of both worlds in terms decentralization and centralization. On the other hand, Ethereum logins that are social recovery wallets can potentially outcompete both centralized and decentralized providers in both self-sovereignty and better account recovery.
Decentralized content, prediction-market-like mechanisms, decentralized sybil resistance, and community-focused forums are “direction to explore,” according to Buterin.
Buterin also mentioned that he is excited about retroactive public good funding. This is where the idea is for a decentralized autonomous organisation (DAO), to determine which projects are valuable to a community’s goals .
Buterin stated that the Ethereum ecosystem must go beyond making tokens to facilitate trading of other tokens. These things are worth layer-one and layer two […], but once you reach layer six, you increase the financial instability and risk that the whole thing will collapse, potentially making regulators mad.
He encouraged the community to “let’s not just do DeFi.” It doesn’t necessarily mean that you should not move beyond it. Buterin believes that the best applications will incorporate elements of finance and other non-finance.
ETH trades at USD 1,981 at 11:29 UTC. It is up by 4% a day, and down nearly 1% a week. It grew by 708% over a single year.