Ethereum co-founder Vitalik Buterin warned that current decentralized stablecoins lack the resiliency needed to support crypto’s long-term vision. He believes that the current industry needs a stablecoin design that is not entirely dependent on the US dollar and cannot be easily controlled by wealthy parties.
In an X post on 11/01/2026, Buterin explained that the current stablecoin model has three main weaknesses.
Dependence on Fiat
In response to Buterin's statement, Georgii Verbitskii, founder of crypto investor app TYMIO, pointed out a fundamental flaw in the current stablecoin model.
“If stablecoins are meant to support long‑term resilience, especially at the level of nation-states or global financial infrastructure, then dependence on a single fiat currency like the U.S. dollar is a structural weakness,” said Verbitskii to Decrypt.
“Over a long enough timeline, inflation, monetary policy, and political control inevitably bleed into the system.”
Oracle Flaws
Second, Buterin warned that most decentralized stablecoins rely on oracles that can be captured with large amounts of money.
Without a better design, the protocol must use high-scale value extraction to remain stable.
Staking Yield
The third problem with decentralized stablecoins is staking yields. If stablecoin holders only receive a few percentage points while staking offers greater rewards, then stablecoins become less competitive.
Stablecoins are cryptocurrencies designed to hold a stable value. These coins are usually pegged to the US dollar or other fiat currencies.
Stablecoins have become one of the fastest-growing segments of the digital asset market. According to DeFi Llama, stablecoin’s market capitalization rose 49% in 2025, hitting $306 billion in December. This growth was driven by increasingly clear regulations and growing institutional adoption.
Why are stablecoins popular among both individual and institutional investors? Learn all about stablecoins in the article What is a Stablecoin? Definition, Types, How It Works, and Examples.
