Vitalik Buterin states that decentralized stablecoins still don’t function effectively in the long run, even after many years of development. He believes that the crypto industry has not solved some fundamental problems. He identified the three Big problems.
Dollar-pegged stablecoins are only temporary solutions
Most of the stablecoins are pegged to the U.S. dollar, which defeats the goal of decentralization. He says that this works for the short term, but makes the Decentralized money depend on a single government currency, which exposes stablecoin to inflation and policy risks. He suggested that instead of copying the dollar, the future stablecoin could track a basket of goods and use purchasing power or broader price indexes.
Oracle is a weak point
Stablecoins rely on the Oracles to know real-world prices. Vitalik Wrans states that if oracles can be influenced by wealthy actors, then the entire stablecoin system becomes unsafe, and a single failure can break the whole system. Protocols then raise fees or rewards just to defend themselves. This leads to over-financialization of Defi, which makes decentralization expensive and fragile.
Staking yields compete with stablecoins
Ethereum staking already offers a return. This creates a problem for the users by making them think, why lock funds into the stablecoin system if staking is safer and earns more? which makes it harder for the stablecoins to attract users and collateral.
Vitalik accepts that Ethereum feels unfinished or uncomfortable, but believes that honesty is better than fake solutions. Many VC-funded projects focus on Custodial stablecoins and yield farming; instead, Ethereum focuses on decentralization, Sovereignty and reducing reliance on centralized power.
On the Final note, he says that stablecoins are not finished products and the problems are deep and structural. So the industry needs more innovations before these systems can be truly stable.
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