Vitalik Buterin: DeFi Is Only Real When Counterparty Risk Is Removed

• Vitalik Buterin said DeFi only counts if it meaningfully removes counterparty risk.
• USDC-based lending keeps risk tied to issuers like Circle, making it closer to TradFi than real DeFi.
• ETH-backed, overcollateralized algorithmic stablecoins reduce trust assumptions and qualify as real DeFi.

Ethereum co-founder Vitalik Buterin claims most DeFi only matters if it removes counterparty risk. During a public exchange with crypto analyst c-node, Buterin argued why many DeFi products look decentralized but still depend on trusted third parties.

Both crypto personalities agreed that yield alone does not make DeFi real. The core goal is self-custody with no single entity able to freeze funds or break the system. If that condition fails, the product is closer to traditional finance with a crypto wrapper.

Why USDC-Based Yield Fails the DeFi Test

Buterin and c-node were …

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