Ethereum co-founder, Vitalik Buterin, has criticized the fast-rising decentralised finance (DeFi) sector as being a short-term excitement.
The Russian-Canadian programmer took to Twitter to express his opinion on DeFi in a series of tweets. In reference to DeFi’s motto of ‘yield farming’, Buterin suggested his disapproval. He also added, in another tweet:
“A lot of the flashy stuff is very exciting, but it’s short term; the reality is that there’s no way that DeFi will have interest rates more than a percentage point above the best of traditional finance in the long run.”
In a DeFi system, users earn high profits by lending their crypto assets to traders for a fee. DeFi’s entire operation is based on decentralized lending and burrowing.
Buterin believes the concept is mediocre and unsustainable. However, he cited several aspects of decentralized systems he admires. They include Decentralized Autonomous Organizations (DAOs) and Decentralised Autonomous Initial Coin Offering (DAICOs), calling them “both exciting and meaningful.”
He even compared PoolTogether, an Ethereum-backed savings game, to a lottery game. Although he admits “it’s a very creative psychological gadget that could improve people’s ability to have savings.”
On the other hand, the DeFi community disagrees with Buterin’s criticism. For example, an Ethereum developer responded by saying that yield farming is just like a traditional VC investment.
The consensus is that DeFi’s excitement is good for future developments.