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Vitalik: USDC Yield is not DeFi, Algorithmic Stablecoins are the Real DeFi

2026.02.09 08:23:50

On February 9, Vitalik Buterin posted on X that: “USDC savings interest isn’t actually DeFi. I believe algorithmic stablecoins are the real DeFi. If we have a high-quality ETH-backed algorithmic stablecoin—even if 99% of its liquidity comes from CDP holders—shifting counterparty risk on the dollar side to liquidity providers is in itself a key feature. Even if an algorithmic stablecoin is backed by RWAs (real-world assets), as long as it’s overcollateralized and its collateral is sufficiently diversified (so the overall collateral remains fully backed even if any single RWA fails), it still represents a meaningful improvement in holders’ risk profile compared to standard structures. I think this design is the direction we should aim for. Building on that, the next step could be gradually moving away from the U.S. dollar as the unit of account and toward a more universal, diversified index-based pricing system. Of course, the current practice of ‘depositing USDC into Aave to earn interest’ doesn’t fall into any of the categories I mentioned.”
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