Vitalik makes a valid point regarding the limitations of DeFi.
The foundation of finance is deeply rooted in a functioning economy of tangible goods and services.
Historically, trade, currency, and even the principles of mathematics have evolved as tools to optimize the exchange and management of agricultural products, valuable minerals, and other critical resources.
Attempting to isolate finance from this underlying economic activity leads to instability. Without a solid base of real-world value, DeFi systems risk becoming self-referential and unsustainable, requiring an ever-increasing influx of capital to maintain functionality. This runs counter to the very essence of technological innovation, which aims to streamline and enhance efficiency.
Fortunately, the emergence of decentralized physical infrastructure networks (DePIN), stablecoins, and real-world assets (RWAs) is beginning to address this disconnect. However, the primary challenge in the crypto space remains consistent:
Sustainable businesses that create genuine value through the production of goods and services.
DeFi’s role should be to facilitate the exchange of this value, but the value itself must first be generated.
There is no viable alternative to this fundamental principle.
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