Vitalik Buterin Supports Algorithmic Stablecoins as True DeF

Vitalik Buterin has emphasized the importance of algorithmic stablecoins in the DeFi ecosystem, suggesting they should be considered genuine decentralized finance. He highlighted the potential of high-quality ETH-collateralized algorithmic stablecoins, noting that even if 99% of liquidity comes from CDP holders with negative algorithmic dollar positions, users can still transfer counterparty risk to market makers, which is a crucial feature.

Buterin also mentioned that algorithmic stablecoins partially backed by real-world assets (RWA) can improve risk structures for holders, provided they remain over-collateralized and highly diversified. He advocates prioritizing ETH-collateralized algorithmic stablecoins, followed by highly diversified, over-collateralized RWA models, and suggests a gradual shift from dollar-denominated units to broader diversified indices.