Ethereum founder Vitalik Buterin encourages the Ethereum ecosystem to treat oracle design and distribution as a top security issue, warning that key parts of the DeFi stack still hide uncomfortable vulnerabilities after the industry’s recent growth.
In a post outlining how the Ethereum Foundation thinks about DeFi, Buterin listed decentralized finance as “a core part of Ethereum’s value proposition” and asserted that its next phase should pair renewed innovation with a hard line on security risks and centralization.
“Defi is a core part of the value Ethereum provides. Financial empowerment is a core part of what it means to have agency and freedom in our world today. Finance is far from the only thing Ethereum is good at, but it is an important one,” Buterin wrote, positioning DeFi not as a sideline application, but as one of Ethereum’s flagship deliverables.
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Buterin’s thesis is two-pronged. The first is ambition: DeFi should return to the early era’s willingness to invent new primitives rather than repeating the same product form. He pointed to AMMs as an example of the kind of paradigm shift he wants developers to pursue, arguing that teams should “dig a layer deeper” than high-level development such as “making a better stablecoin” and instead attack fundamental financial problems: risk management and hedging future costs with new processes.
The second edge is the filter. Buterin said that the Ethereum Foundation is not looking to support “onchain funds” or “defi” indiscriminately, but to push it to a narrow vision: “non-permissible, open source, privacy, security – the first global finance that increases people’s control over their assets, reduces centralized chokepoints and risks the creation of democracy and third parties for payments and trusted payments …,
An important standard in that view is operational stability. Buterin said the ecosystem should choose systems that “pass the walking test”: systems that continue to function even if the founding team disappears overnight or worse, “become hostile / vulnerable without warning.” It’s a strong symbol in a field where management keys, development methods, and offchain dependencies tend to concentrate power long after the protocol appears to be “segregated” in marketing.
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Where the alarm bell rings loudest are oracles: the bridge between onchain logic and offchain reality. In the list of important areas, Buterin singled out “oracle security and zoning,” adding in a blunt aside: “THERE ARE BONE KINGS here, we as an ecosystem really need to point the big eye of sauron at it for a while.” The line means: it suggests risks that are known, tolerated, or less discussed, except for oracles that sit in the important way of lending, stablecoins, derivatives, and liquidation.
Buterin characterized DeFi as a “complex tool chain” that mixes onchain and user-side components with other offchain pieces – wallets, local agents, and more. His roadmap-like list reflects that scope: traditional security work such as audits, standards, and wallet-side protections; new approaches such as “AI-assisted legal authentication” and “user-side agents as safeguards”; the privacy of both payments and complex positions, including the question of what a “highly private CDP” would look like; and a renewed emphasis on open source licensing and forkability.
The closing message is permissive but not exhaustive. Ethereum will always allow people to use “insecure protocols” or systems that embed “unnecessary trust in the name of convenience,” Buterin writes, and what he calls “dopamine-maximizing gambleslop.”
But he signed the intention of the Foundation to work actively with developers who are compatible with reducing intermediaries and increasing the agency of the user, with the aim of making that version of DeFi not only the best option for Ethereum, but “a globally compelling way to manage funds” for anyone who values those structures.
At press time, ETH traded at $1,912.
The featured image was created with DALL.E, a chart from TradingView.com
