Vitalik Buterin points out issues of decentralization in stablecoins - ForkLog: cryptocurrencies, AI, singularity, the future

# Vitalik Buterin Highlights Issues in Stablecoin Decentralization

The crypto market needs more advanced decentralized “stablecoins” that address long-term issues such as inflation. Ethereum co-founder Vitalik Buterin stated this.

We need better decentralized stablecoins. IMO three problems:

1. Ideally figure out an index to track that’s better than USD price
2. Oracle design that’s decentralized and is not capturable with a large pool of money
3. Solve the problem that staking yield is competition…

— vitalik.eth (@VitalikButerin) January 11, 2026

The developer outlined three main requests for the segment:

1. Stablecoins need an index that “performs better than the dollar rate.”
2. It is necessary to create a decentralized and attack-resistant oracle pool.
3. The issue of competition for staking yields must be addressed.

“Tracking the US dollar is good in the short term, but in my view, part of the sustainability concept should be independence even from this price ticker. What if hyperinflation occurs in the 20-year perspective?” — Buterin

In the absence of a protected oracle to hedge against protocol takeover, developers typically “inflate” the token value to make attacks prohibitively expensive. However, to maintain a high token price, the project must promise investors super profits, extracted through high fees. This makes protocol usage unprofitable.

Buterin called such a situation a “dead end,” as these systems lack an “asymmetry of protection” — in such cases, both attack and defense boil down to a “financial race.”

“This is one of the main reasons I constantly oppose financial management […]. And, of course, this is one of the main reasons I do not intend to fully abandon DAOs,” — he added

Regarding staking, the programmer emphasized that even a couple of extra percentage points of APY negatively impact the coin. He proposed possible solutions:

• Reduce staking yields to a “hobbyist” level of around 0.2%;
• Create a new staking category with high returns but without the risk of penalties;
• Find a way to combine sanctions for violations with the ability to use collateral assets.

Ethereum co-founder reminded that stablecoins cannot be backed by a fixed amount of ETH, as in case of a sharp price drop, rebalancing must be possible.

Recall that in January, Buterin compared Ethereum to BitTorrent and Linux in terms of scale and reliability.