Crypto pioneer Vitalik Buterin is naming five things happening in the Ethereum (ETH) application ecosystem that he says are the most exciting to him.
In a new blog post, the Ethereum creator starts his list with “money,” which he says is the most important application in cryptocurrency.
Specifically, Buterin says that stablecoins are one of the most important aspects of being able to use cryptocurrency as a form of money.
“In either case, any kind of stablecoin working well would be a boon for many kinds of currency and savings applications that are already concretely useful for millions of people today.”
Second on Buterin’s list is decentralized finance (DeFi), and he says decentralized stablecoins are probably the most essential DeFi product of them all.
“Decentralized finance is, in my view, a category that started off honorable but limited, turned into somewhat of an overcapitalized monster that relied on unsustainable forms of yield forming, and is now in the early stages of setting down into a stable medium, improving security and refocusing on a few applications that are particularly valuable.
Decentralized stablecoins are, and probably forever will be, the most important DeFi product, but there are a few others that have an important niche.”
The Ethereum creator also says that prediction markets, synthetic assets, and “glue layers for efficiently trading between other assets” are important components of the DeFi world.
The third thing happening in Ethereum that excites Buterin is the identity ecosystem, including Ethereum Name Service (ENS), which allows users to have custom domain names in place of their regular crypto address.
While powerful, Buterin says the main challenge within the identity ecosystem is maintaining privacy.
“The big future challenge for this ecosystem is privacy. The status quo involves putting large amounts of information on-chain, which is something that is ‘fine until it’s not’, and eventually will become unpalatable if not outright risky to more and more people.”
The fourth thing that Buterin identifies are decentralized autonomous organizations (DAOs). He uses Gitcoin, a platform where crypto developers can get paid to work on open source software, as an example of something that could benefit from being a DAO.
“Here are some possible arguments for Gitcoin Grants to be a DAO:
- It holds and deals with cryptocurrency because most of its users and funders are Ethereum users
- Secure quadratic funding is best done on-chain (see next section on blockchain voting and implementation of on-chain QF here), so you reduce security risks if the result of the vote feeds into the system directly
- It deals with communities all around the world, and so benefits from being credibly neutral and not centered around a single country.
- It benefits from being able to give its users confidence that it will still be around in five years, so that public goods funders can start projects now and hope to be rewarded later.”
The fifth most exciting thing for Buterin are hybrid applications, or applications that are not entirely on-chain but use blockchain for certain aspects.
The entire blog post can be read here.
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