Vitalik Buterin Warns of Critical Flaws in Decentralized Stablecoins (DAI, LUSD)

Ethereum co-founder Vitalik Buterin has issued a critical warning about the current state of decentralized stablecoins. In a recent analysis, Buterin highlighted that protocols like MakerDAO's DAI and Liquity's LUSD still possess fundamental design weaknesses that could threaten their long-term stability. He pointed out that most major "de-fi" stablecoins rely heavily on centralized assets, such as USDC, as collateral, creating a vulnerability that contradicts the core principle of decentralization. Buterin emphasized that while these stablecoins are more decentralized than fiat-backed alternatives, they have not yet solved the "trilemma" of being stable, decentralized, and scalable simultaneously. The Ethereum founder called for continued research and innovation to develop truly robust and trustless stablecoin models that can operate independently of traditional financial systems.