Vitalik May Not Love DeFi, But He Certainly Uses It

Ethereum chief scientist and co-founder Vitalik Buterin has not been shy about critiquing decentralized finance (DeFi), but an in-depth look at his on-chain activity tells a different story.

Buterin remains a regular DeFi user, with $9.2 million spread across major DeFi protocols like Aave and MakerDAO.

On Sept. 12, Buterin deposited 2,851 ETH, worth roughly $6.7 million, into Aave. He also deposited 2.27 million USDC, the proceeds from selling 950 ETH over the previous two weeks.

This isn’t the first time Buterin has used Aave. On Aug. 30, Buterin transferred $4.8 million (about 1,900 ETH) into Aave. Aave is the largest DeFi money market with $11.5 billion in total value locked (TVL) that enables users to earn yield by lending their digital assets.

Buterin has also been using MakerDAO for seven years, with approximately $300,000 currently deposited in the protocol. MakerDAO, with $3.91 billion in TVL, enables users to borrow the DAI stablecoin against crypto collateral.

While actively engaging with DeFi protocols like Aave and MakerDAO, Buterin has taken a more critical stance toward yield farming and liquidity mining.

On Aug. 25, Buterin described these practices as unsustainable, comparing them to an ouroboros — a snake eating its own tail. “I would love to see a story for where the yield is coming from, or could come from, that's rooted in something external,” Buterin wrote.

Buterin’s criticism extended beyond yield schemes to the broader DeFi ecosystem, particularly products born from the “2021-era liquidity farming craze.” However, he did make exceptions for decentralized exchanges (DEXs) and stablecoins, which he praised as having more sustainable use cases. "I think DEXes are great, and I use them every week," Buterin wrote.

Buterin’s criticism of DeFi came after Kain Warwick, founder of Synthetix, voiced frustration in a podcast appearance on Aug. 23, arguing that Buterin was “moralizing” about DeFi’s shortcomings. “He keeps trying to meme non-DeFi things into existence,” Warwick said. “One of the most critical things that he’s gotten wrong over the last five years is the importance of DeFi.”

Buterin’s Broad DeFi Footprint

An analysis of Buterin’s seven publicly known Ethereum wallets reveals a deep engagement with DeFi, featuring 213 transactions across 12 DEXs since 2015, with a total value of $71 million, according to data from Arkham Intelligence.

A significant portion of his DeFi transactions — 126 – were on Uniswap, the leading decentralized exchange by trading volume. The largest transaction occurred on May 13, 2021, when he sold $10 million worth of the HUSKY memecoin. Most of Buterin’s activity on Uniswap involves selling memecoins like SHIB, SDOG, and AKITA.

It was common practice for memecoin developers to send large quantities of their tokens to Buterin’s public wallet, often as a marketing strategy to give the coins credibility or generate buzz.

For instance, in May 2021, the developers behind Shiba Inu (SHIB) sent half of its total supply to Buterin, hoping he would hold onto it. Instead, Buterin famously donated $1.56 billion to the India COVID-19 Relief Fund and other charities. Similarly, AKITA developers sent large holdings to Buterin, only for him to sell or donate the tokens.

Buterin has also extensively used CoW Protocol, a DEX aggregator, for 46 transactions worth $14.8 million. He has also had smaller interactions with Balancer, Synthetix, Loopring, Kyber Network, and PancakeSwap.

In addition, Buterin has used the Ethereum Name Service (ENS) to acquire and renew domain names, sending 12 transactions to the ENS smart contracts. His first two transfers — a 50 ETH and a 250 ETH transaction (worth $113,000 at the time) — were bids on domain names. The latest was a month ago, on Aug. 18, for $489.

Igor Barinov, founder and CEO of Blockscout, an open-source block explorer for Ethereum Virtual Machine (EVM) based chains, said Buterin sees DeFi as just one small part of the Ethereum ecosystem.

“It’s blown out of proportion that he is anti-DeFi — he just uses DeFi platforms that have a track record along with real utility for what he needs,” Barinov told The Defiant. “It’s likely he’s disappointed that the transformative technology of Ethereum is being primarily used to enrich a few, and bankrupt many in a giant ponzi casino.”

Barinov noted that Buterin’s vision for Ethereum is far broader than DeFi.

“He criticizes these platforms because he wants Ethereum to be much more than just a financial infrastructure. He sees it as changing every level of society, from government to school, to social interaction to entertainment,” Barinov added.

Josh Benaron, founder of Irys, a Layer 1 programmable data chain, echoed similar sentiments about Buterin’s criticism of DeFi, specifically liquidity farming.

“When it comes to liquidity farming, the argument of sustainability comes up and he noted that liquidity farming came from token issuances that are fundamentally temporary,” Benaron told The Defiant. “What Vitalik looks for is whether a protocol can run on Ethereum long term, he may not find short trends very interesting.”

Preetam Rao, CEO and co-founder of QuillAudits, said that while Vitalik's relationship with DeFi is "complicated," his criticisms stem from a concern that many DeFi protocols are too self-referential and disconnected from the "real economy."

"Vitalik’s not saying DeFi is garbage. He just thinks most of it hasn’t evolved enough yet to meet his standards of decentralization and sustainability," Rao told The Defiant. "He’s focusing more on building DeFi that’s actually connected to real-world use cases, not just pumping out tokens or relying on short-term hype.”