Ethereum Foundation & Vitalik’s DeFi Values Questioned: Where Do They Stand?

• Synthetix founder Kain Warwick has accused Vitalik Buterin and the Ethereum Foundation of being anti-DeFi.
• Kain’s outburst has unsurprisingly sparked debates.
• Vitalik has responded to these debates by trying to clarify his stance on crypto applications.

Crypto and blockchain technology have been tipped to revolutionize several aspects of life, the most obvious being finance amid DeFi ‘s promise to bank the unbanked by lowering the barriers to entry to financial services like loans.

Aided by its first-mover advantage with smart contracts and its enduring and evolving technology, Ethereum has emerged as the home of DeFi, often dubbed the “DeFi King.” Despite the sector’s success on Ethereum and contribution to Ethereum’s success, a recent outburst by a respected DeFi founder has suggested that the sector faces a challenge from Ethereum co-founder Vitalik Buterin and the Ethereum Foundation.

Vitalik and the Ethereum Foundation “Discouraging” DeFi?

Over the past few days, the Ethereum community has been rife with debates over Vitalik’s and the Ethereum Foundation’s stance on DeFi. The debates followed comments made by Synthetix Founder Kain Warwick on an August 23 Steady Lads podcast episode . 

During the podcast, Warwick accused Vitalik of discouraging DeFi, which he argued was the main use case for Ethereum in favor of solutions around messaging and identity, which he argued the market was not interested in. The Synthetix founder further argued that the Ethereum Foundation has also adopted Vitalik’s views. He stressed that the continued discouragement of DeFi despite its contribution to Ethereum was frustrating for founders.

The recent podcast appearance is the second time Warwick has discussed his displeasure with Vitalik’s perceived lackluster posturing on DeFi. The Synthetix founder had first expressed his displeasure in an August 7 X post , which garnered similar attention.

"If the only thing propping up your chain for the last five years is DeFi, and the best you can muster is begrudgingly tolerating it, you are anti-DeFi. I'm sorry but the default position should be absolutely falling over yourself to support and encourage it," Warwick wrote at the time.

Amid the questions surrounding Warwick’s recent Steady Labs appearance, Vitalik has moved to clarify his stance on DeFi.

The Kinds of Applications Vitalik Wants to See

Responding to Synthetix contributor Millie’s reaction to Warwick’s recent statements on Sunday, August 25, Vitalik tried to clarify that contrary to Warwick’s suggestions, he was not against all of DeFi but only certain types of applications.

In the post , the Ethereum co-founder outlined that he liked applications that offered sustainable use cases without sacrificing permissionlessness and decentralization, outlining decentralized exchanges and decentralized stablecoins like MakerDAO’s RAI as examples of these.

"I think DEXes are great, and I use them every week. I think decentralized stablecoins (eg. RAI) are great," he wrote.

On the other hand, Vitalik noted that he opposed applications that only had short-term appeal, citing the “ liquidity farming craze” of 2021 as an example.

"If people tell me 'you can get good yield by parking your coins here', my question always is, 'where does the yield come from?'. Who are the people on the other side of the transaction, who are paying the yield? In those cases where there is a specific answer to the question, that there is a good reason to believe will remain true in 5 years, then I am absolutely excited about it," the Ethereum co-founder wrote explaining his reasoning on DeFi.

Explaining his continued support for seemingly non-DeFi applications, Vitalik stressed that “finance isn’t enough.” The Ethereum co-founder argued that blockchain had the potential to solve several world problems, including privacy and censorship, to create a better world. However, he noted that these other sectors were not getting as much financing as pure DeFi, making vocal support necessary.

"'other decentralized tech' is a sector that does not naturally get $100M VC rounds, so I think it needs a high level of explicit support today, though my ideal case is one where we can find stable feedback loops for it to get developed," he wrote.

On the Flipside 

• Despite Synthetix Warwick’s gripes, he maintained on the Steady Lads podcast that the Ethereum network offered the best trade-offs for DeFi builders.
• Despite concerns over Vitalik’s and the Ethereum Foundation’s perceived lack of support for DeFi, the sector has seen significant growth in 2024 amid broader crypto market tailwinds.

Why This Matters

DeFi is the most used application for Ethereum. If DeFi protocol builders feel frustrated by poor network support, they may decide to move their projects and the value they bring elsewhere.

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