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

BlockBeats News, February 9th, Vitalik Buterin posted on the X platform, stating, "USDC savings interest does not count as DeFi. I believe that algorithmic stablecoins are the true DeFi. If we have a high-quality algorithmic stablecoin backed by ETH, then even if 99% of the liquidity is actually provided by CDP holders, as long as you can transfer the counterparty risk on the dollar side to the liquidity provider, this in itself is a significant feature.

Even if an algorithmic stablecoin is backed by RWAs, as long as it is overcollateralized, and the collateral assets are sufficiently diversified—so that even if any single RWA has issues, the overall collateral remains fully backed—compared to a standard structure, it is still a meaningful improvement in terms of the risk characteristics borne by holders.

I believe that this type of design is the direction we should strive for. Building on this, the next step could gradually move away from the dollar as the unit of account and towards a more universal, more diversified index-based pricing system. Of course, the current practice of 'depositing USDC into Aave to earn interest' does not fit into any of the categories I mentioned above."