Regarding the future of stablecoins, Vitalik Buterin recently expressed some sharp opinions. He believes that Ethereum needs more robust decentralized stablecoins to truly break free from reliance on traditional financial systems.

Where exactly is the problem? Buterin pointed out three core difficulties.

First is the dollar dependency. Data from CoinGecko is straightforward—95% of stablecoins on the market are pegged to the US dollar. This approach seems stable in the short term, but in the long run, such reliance on national currencies undermines the meaning of decentralization.

Second is the protection of oracles. Oracles need to be sufficiently resilient to resist manipulation attacks, but this cannot come at the expense of increasing user costs or artificially inflating token prices. Easier said than done.

Third is the balance of staking yields. High yields are attractive, but if maintaining high yields involves damaging collateral or affecting user experience, then it’s counterproductive. Buterin suggests bringing staking yields down to around 0.2% and exploring new staking models.

The reality is harsh: Tether’s USDT and Circle’s USDC dominate over 83% of the market. After TerraClassicUSD lost its peg, innovation in decentralized stablecoins stalled. While Ethena’s USDe and Maker’s DAI are widely used, they fundamentally cannot shake the dominance of USDT and USDC.