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Decentralized stablecoins face three main problems, one of which is the dollar exchange rate, says Ethereum co-founder Vitalik Buterin. According to him, to ensure the long-term sustainability of stable cryptocurrencies, they need to be improved.
The first problem lies in the excessive dependence of stablecoins on the US dollar. Although in the short term a peg to the American national currency looks justified, strategically (especially over a 20-year period) it creates significant risks, Buterin points out. In the event of even moderate hyperinflation of the US currency, the entire system will be vulnerable. Buterin insists on the need to develop an alternative index that can more reliably reflect the real value of assets without relying on the dollar.
Another critical aspect that Buterin mentioned is the backing of the stablecoin with a fixed amount of collateral in ether. In the event of a sharp drop in the price of ether, the system must have flexible rebalancing mechanisms. Theoretically, it is possible to partially abandon the hard peg, for example, by temporarily suspending staking profitability during large fluctuations in the ETH price until corrective measures are taken. However, this approach requires careful consideration so as not to undermine user trust.
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The second problem relates to the architecture of Oracle services – the mechanisms that supply real data to the blockchain so that stablecoins maintain accurate value and adequate collateral. Buterin emphasizes that the mechanisms must be sufficiently resistant to manipulation attacks. However, protocols should not compensate for risks at the expense of users – for example, by increasing fees or artificially inflating prices.
The third problem concerns staking – a mechanism that allows you to earn income for storing cryptocurrency. According to Buterin, it is necessary to maintain high staking profitability without undermining the stability of the collateral and without scaring off users. As a solution, he proposes either to sharply reduce the profitability to approximately 0.2%, or to introduce a new type of staking that eliminates the traditional risks of “slashing” (fines for the dishonest behavior of validators).
Buterin also warns that the security of a stablecoin must take into account both protocol errors and attacks on the network.
Previously, the co-founder of Ethereum supported the developer of the cryptomixer Tornado Cash, Roman Storm, who was convicted in August 2025 of operating an unlicensed money transfer service. According to Buterin, privacy is an inviolable human right, and Storm’s programs that ensured this privacy did not violate the law.
