Vitalik: Algorithmic stablecoins are truly the essence of DeFi, representing a new frontier in decentralized finance that leverages algorithms to maintain stability without centralized control.

ZkProver · 2026-02-10T00:40:47+00:00

Vitalik Buterin stated on X that algorithmic stablecoins are an important component of DeFi, and supporting stablecoins with ETH as the underlying asset can effectively transfer counterparty risk. He suggests that industry development should move away from USD-pegged valuation and shift toward diversified indices, and that USDC deposits on Aave are not included in this category.

ZkProver

2026-02-10 00:40:47

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ChainCatcher News, Vitalik Buterin posted on X stating that algorithmic stablecoins are truly part of DeFi. He believes that if high-quality algorithmic stablecoins backed by ETH as the underlying asset exist, even if the majority of liquidity is supported by CDP holders holding negative algorithmic dollars, the ability to transfer counterparty risk to market makers remains an important feature. Even if algorithmic stablecoins are backed by RWA, ensuring sufficient collateral through over-collateralization and diversification to maintain adequate collateral when a single RWA fails is also an effective risk improvement for holders.

He pointed out that the industry should develop in these directions and gradually move away from using the US dollar as the pricing unit, towards more universal diversified indices. Additionally, currently depositing USDC into Aave does not fall into the above categories.

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