Vitalik Buterin Says Ethereum Still Needs a Stronger Decentralized Stablecoin

Jakarta, Pintu News – Ethereum (ETH) co-creator Vitalik Buterin thinks Ethereum needs a better decentralized stablecoin to truly give people financial independence, independent of the traditional financial system.

“We need a better decentralized stablecoin,” Buterin said in a post on the X platform on Sunday.

He made this statement in response to comments by Gabriel Shapiro, a lawyer from crypto investment firm Delphi Labs, who said that Ethereum is “doubling down on efforts to disrupt power in favor of sovereign individuals.”

However, according to Buterin, in order for this to happen, decentralized stablecoins must be able to overcome three main problems.

Three Major Problems Haunting Decentralized Stablecoins

One of the main problems, according to Vitalik Buterin, is the fact that most stablecoins are currently pegged to the US dollar. Data from CoinGecko shows that around 95% of stablecoins refer to the USD value.

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Buterin stated that while using a USD peg may be acceptable in the short term, the resilience of stablecoins shouldn’t depend on the strength of a country’s economy.

“If we’re talking about a 20-year timeframe, what if the USD has high inflation – or even just moderate inflation?” Buterin said. He suggested that there should be an alternative index that is more stable and sustainable than just following the value of the US dollar.

The second issue relates to oracles, which are systems that connect real-world data to the blockchain to keep stablecoin values accurate and ensure collateral is appropriate.

According to Buterin, the oracle must be resilient enough to manipulation attacks, without causing high fees for users or creating artificial inflation in the token price. The third issue, Buterin continued, is that the returns on staking must remain attractive, without destabilizing the collateral or inhibiting the use of the stablecoin itself.

He proposed that the return on staking be drastically reduced to around 0.2%, while introducing a new type of staking that avoids the risk of slashing that is common in traditional staking.

Buterin also warned that the security of stablecoins should cover two main aspects: errors in the protocol and attacks on the network. He emphasized that no matter how large Ethereum’s reserves are, they still can’t fully guarantee the stability of stablecoins, so there needs to be a special mechanism to deal with large price fluctuations.

Today, the stablecoin market has grown rapidly, reaching a value of $311.5 billion by 2026 – an increase of about 50% compared to the beginning of 2025.

Stablecoins are widely used by people in developing countries, especially for cross-border remittances and as a store of value. On the other hand, financial institutions utilize stablecoins for large transactions and liquidity management.

Decentralized stablecoins still lag far behind USDT and USDC

Centralized stablecoins like Tether (USDT) and Circle’s USDC (USDC) currently dominate the market, accounting for over 83% of the total stablecoin market capitalization. They also lead in terms of trading volume by a similar proportion.

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Innovation in the decentralized stablecoin sector appears to have slowed down since the TerraClassicUSD (USTC) failure in May 2022, when the stablecoin lost its value benchmark and caused an estimated $60 billion loss in the Terra ecosystem.

Since then, Ethena’s stablecoin USDe (USDe) has arguably been the most prominent new player. Meanwhile, Dai (DAI) still remains widely used in the DeFi world for lending, borrowing, and liquidity provision.

However, neither USDe nor DAI have been able to significantly rival the dominance of USDT and USDC, with market capitalizations of only $6.3 billion and $4.2 billion, respectively.

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Reference:

• Coinpedia. Vitalik Buterin Wants Ethereum to Survive Without Him, Reveals 7-Step Plan. Accessed on January 13, 2026
• Cointelegraph. Vitalik Buterin Calls for Better Decentralized Stablecoins. Accessed on January 13, 2026