Vitalik discusses the three major challenges of decentralized stablecoins: oracles, USD dependency, and yield dilemma

【CoinDesk】Ethereum founder Vitalik recently wrote that there is still a lot of work to be done for decentralized stablecoins in the current stage of the crypto industry. He listed three urgent challenges to overcome.

First is the issue of price anchoring. Instead of continuing to fixate on the US dollar, it’s better to find a more scientific indicator to track. After all, the original intention of establishing a “national resistance” is to shed dependence on the US dollar, so that true independence can be achieved.

Second, the design of oracles is crucial. If oracles are easily bought off by large capital, protocols will need to set prohibitively high extraction costs to defend themselves, making attacks more expensive than the protocol’s own value. Clearly, this is not a sustainable solution; a decentralized and uncontrollable oracle mechanism must be built.

The third pain point is yield competitiveness. Many decentralized stablecoins have failed to attract large amounts of capital because their yields are too low. Especially when compared to other staking products, they often offer several percentage points less. In the long run, this yield gap will become the ceiling for stablecoin growth.

These three issues are interconnected. To truly promote the implementation of decentralized stablecoins, these challenges must be addressed.