Ethereum founder Vitalik Buterin: DeFi can now compete with traditional banks

In today's rapidly changing world of crypto assets, Ethereum co-founder Vitalik Buterin, affectionately known in the community as “V神”, has once again made a significant impact with his forward-thinking insights, dropping a bombshell on the entire industry. He not only expressed his confidence in the security of Decentralized Finance (DeFi) in public, believing that it can compete with traditional banking systems in certain aspects, but also took practical action by collaborating with the Ethereum Foundation to release the “Trustless Manifesto”, aimed at recalibrating the future direction of Ethereum and ensuring that its essence of “Decentralization” and “Anti-Censorship” is not eroded. This series of actions not only affirms the current state of DeFi development but also serves as a profound prophecy for the future financial paradigm.

Decentralized Finance and banks

For a long time, traditional banks have been seen as a “safe haven” for funds due to their large systems, strict regulations, and seemingly unassailable reputation. However, both the global financial crisis of 2008 and the recent frequent bank failures have exposed the vulnerabilities of this centralized trust system—opaque internal operations, counterparty risks, and excessive reliance on centralized institutions can all become the fuse that ignites systemic risks.

Vitalik Buterin raised a thought-provoking point: the security of DeFi is not worse compared to traditional banks, but fundamentally different in the types of risks involved. He believes that the core risk of DeFi lies in “code risk”, which refers to potential vulnerabilities in smart contracts. This is a technical issue that, although severe, has solutions that are open and transparent—open-source code is available for anyone to audit, security firms and white-hat hackers continuously conduct vulnerability assessments, and the entire community oversees the process. Once a protocol has stood the test of time and undergone multiple audits, its certainty and reliability will increase.

In contrast, the risks of traditional finance are more about “human risks” and “systemic risks.” Your assets are held in custody by banks, and the trust lies in the bank's management, operational systems, and the government guarantees behind them. This trust chain is long and opaque. When banks misappropriate customer funds for high-risk investments or mismanage them, depositors are often the last to know and may face difficulties in withdrawing their funds or even losing everything.

From this perspective, DeFi achieves self-custody of assets through “code is law”, transferring the need for trust from opaque centralized institutions to verifiable, auditable open-source code. This represents a paradigm shift: from trusting “people” to trusting “mathematics and code”. Vitalik Buterin believes that as DeFi protocols mature, the risk of losses due to code vulnerabilities is gradually decreasing, and their transparency, permissionless nature, and self-custody features demonstrate unparalleled advantages in resisting human moral hazards and centralized scrutiny compared to traditional banks. This is precisely the confidence behind his claim that DeFi has the potential to rival banks.

The Untrusted Declaration

Vitalik Buterin's confidence is not unfounded; it is rooted in Ethereum's steadfast commitment to the core value of “Decentralization.” To fully implement this concept, Vitalik Buterin collaborated with Ethereum Foundation researchers Yoav Weiss and Marissa Posner to co-author and publish the “Trustless Manifesto.” This manifesto is not a hollow collection of slogans, but a profound self-reflection and a serious commitment to the future.

1. Core Objective: Resist the centralized temptation of “convenience”

The declaration clearly states that the goal of Ethereum is to achieve “coordination without trusted intermediaries.” However, in the pursuit of rapid development and user growth, many projects and protocols unconsciously take a “convenient shortcut”—introducing centralized relayers or hosted nodes. These components initially seem harmless and can significantly enhance user experience and transaction speed, but the declaration warns that “every piece of code written for convenience may become a choke point in the future.”

This “boiling frog” style of centralization will gradually erode the permissionless nature of the protocol over time. Once users and developers get used to these centralized services, the network may become dependent on them, thus opening the door to censorship, single points of failure, and abuse of power. The declaration emphasizes that “Trustlessness is not a feature that can be added later; it is everything we strive for.”

2. The Four Pillars of the Declaration

The “Untrust Declaration” boldly presents four core values: Credible Neutrality: The protocol rules should not favor any specific participant. Self-custody: Users should always have complete control over their assets. Verifiability: All states and operations of the system should be independently verifiable. Resistance to “convenient” centralization: Be vigilant and reject solutions that trade off decentralization for short-term convenience.

These four pillars together form the cornerstone of the ideal form of Ethereum. To emphasize its seriousness and immutability, the declaration itself has been published on the Ethereum mainnet, accessible through the ENS domain “trustlessmanifesto.eth”. This act itself is a profound practice: “engraving” the declaration on the blockchain, making it an eternal, public, and censorship-resistant commitment.

The far-reaching impact of the declaration

The release of the “Trustless Declaration” forms a perfect logical loop with Vitalik Buterin's confidence in Decentralized Finance. A truly powerful DeFi ecosystem must be built on a sufficiently decentralized, censorship-resistant, and neutral underlying public blockchain. If Ethereum itself becomes centralized in pursuit of convenience, then all DeFi protocols running on it, no matter how ingeniously designed, will ultimately become “castles in the air,” and their so-called “self-custody” and “censorship resistance” will also become mere empty words.

This declaration is a clear signal from the Ethereum Foundation to the entire community: Ethereum will defend its core values at all costs. This is crucial for the future development of Decentralized Finance: Consolidating the Value Proposition of DeFi: The declaration ensures the reliability of the underlying infrastructure that DeFi applications rely on, allowing DeFi to confidently claim itself as an alternative to traditional finance, rather than a mere appendage. Guiding Developer Culture: It provides a clear design philosophy for developers within the ecosystem, encouraging them to prioritize decentralization and user sovereignty when building applications, rather than just pursuing superficial user growth data. Enhancing Long-Term Confidence: Through this “back to basics” approach, Ethereum demonstrates its seriousness and long-term vision as a global settlement layer to the world. This includes not only continuous upgrades on the technical level (such as the planned shutdown of the Holešky testnet to optimize resources after the recent completion of the Fusaka upgrade test), but also a commitment to philosophical and value-based principles.

Conclusion

From claiming that DeFi can rival banks to releasing the “Trustless Manifesto”, Vitalik Buterin and the Ethereum Foundation are playing a big game. They clearly understand that the true power of DeFi comes from its disruptive “trustless” paradigm, and the realization of this paradigm relies on an equally “trustless” underlying network.

The “Trustless Declaration” is not just a declaration; it is Ethereum's “constitutional amendment” and a “ballast” for DeFi's journey into the mainstream. It reminds every practitioner why we set out on the journey towards the stars and the sea. Only by adhering to the original intention of decentralization can DeFi truly grow into a new generation of financial infrastructure that can stand shoulder to shoulder with the traditional banking system and even ultimately surpass it, bringing a more open, fair, and transparent financial future for all humanity.