Updated: Ethereum Co-Founder Vitalik Buterin Suggests That DeFi Shouldn't Be Treated as Safe Investment

Libra Coin News
Mon, 09/16/2019 - 05:14
Alex Dovbnya
Ethereum co-founder Vitalik Buterin warns investors about the pitfalls of putting money into DeFi, but doesn’t deny the potential of these projects
Cover image via www.123rf.com

During the ongoing Ethereal Summit in Tel Aviv, Ethereum creator Vitalik Buterin shared his criticism of Decentralized Finance (DeFi), the ecosystem of platforms that facilitate the delivery of traditional financial services with the help of Blockchain.

According to Coindesk’s Leigh Cuen, Buterin opined that people shouldn't be encouraged to invest in “those things.”

Later, Buterin clarified that he did not encourage people to treat DeFi as a safe asset given that these projects can still incur some risk. However, he apparently doesn't think that it would be irresponsible to invest in them.

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Stepping into untested waters

According to ConsenSys, DeFi represents one of the fastest-growing sectors of the Blockchain industry with more than 100 projects built on the Ethereum network, including stablecoins, DEXs, insurance, lending, etc.

MakerDAO, a platform for getting ETH-collateralized loans, is one of the most salient examples of such projects. Meanwhile, the likes of Etherisc and Dynamis are slowly reshaping the multi-billion insurance industry by eliminating many unnecessary costs.

However, despite all the excitement, Buterin slams DeFi as new and untested. Hence, there is “a risk of breaking.”

The Joseph Lubin-led company has just announced the launch of a new DeFi product.

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Reviving Ethereum’s mojo

With that being said, Buterin doesn’t deny that DeFi holds a lot of promise. He finds its “very powerful” that people from around the globe will be able to choose their own financial exposure.

Back in April, Buterin claimed that DeFi could move beyond the need for collateral and mold into an effective credit system on the Blockchain.

With the 2017 ICO craze whirring away in the background, DeFi could become the next big thing for Ethereum.

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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