Thread by @RyanSAdams

People who haven't watched Vitalik don't know the insanely high bar it requires for him to be genuinely proud of crypto financial apps.

He's pretty much withheld his praise until now. This post was the first time he said DeFi is Ethereum's killer app.

Vitalik's bar for DeFi

To pass Vitalik's "killer app" bar Ethereum DeFi has to improve a broad set of people lives in a proven and scalable way - when i say broad, i mean global, everyone on the internet - and when i say improve, I mean it has to be an unambiguous societal good.

Vitalik is saying that as of this year Ethereum L1 has passed this bar for several key money verbs:

- Holding (storing value)
- Trading (exchanging assets)
- Lending (generating yield)
- Borrowing (collateral backed)
- Issuing (creating assets)

These he calls low-risk DeFi. (I call it "going bankless")

The incredible thing Ethereum has accomplished is to make these low-risk economic opportunities "globally and permissionlessly accessible" - whereas non-shitty banking used to be available only for elites who won the geographic lottery - now anyone with an internet connection can access low risk holding, trading, lending, and borrowing.

They have freedom to choose assets: crypto native (like ETH) or fiat assets (like dollars) as they prefer. Everything a swap away.

He compares DeFi to Google.

If Ethereum is the internet then DeFi is Google

Ethereum = internet of value
DeFi = Ethereum's Google

Low risk DeFi on Ethereum:

1) drives value to ETH (using ETH as a collateral assets and transaction fees)

2) avoids corruption pressures (low risk DeFi is slower - avoids push toward HFT centralization)

3) is scalable (everything is in place to scale this to many tens of trillions - network effect of liquidity and assets)

Lastly, he points out - these low risk money protocols are the foundation for building even more impactful DeFi primitives like Credit.

I read not only optimism for DeFi but also an optimism for ETH and the Ethereum L1 scaling roadmap.

ETH = SoV collateral (world reserve asset)
DeFi = killer app (world banking layer)
Ethereum L1 = ledger for slow DeFi (world ledger)
Ethereum L2s = ledgers for fast DeFi (e.g. exchanges)

He's saying it's all coming together now, our progress:

ETH = $540 billion (scaling to trillions)
DeFi assets = $500 billion (scaling to tens of trillions)
DeFi TVL = $100 billion (scaling to tens of trillions)
Ethereum L1 = 20 tps scaling to 10k tps
Ethereum L2s = 3k tps scaling to 1m tps

For those saying other chains prioritizing speed or BD are eating Ethereum - I think he'd disagree. Most of these are HFT chains competing with Ethereum L2s for fast DeFi.

It seem to me Vitalik has always operated under the assumption that the most credibly neutral chain would:

- win the liquidity
- win DeFi that matters most
- win the users & institutions
- win status as world reserve asset

And the data is showing he's been mostly right.

Ask yourself - on what chain are you most comfortable holding assets if you had to disappear for a decade?

There's probably only two that make the cut: bitcoin and ethereum. Of the two, only ethereum has low-risk DeFi.

Idk guys it's just a bullish post.

"Have we earned it"
"Yes. We're clearly in the process of earning it."

Vitalik thinks DeFi is the killer app and Ethereum should double down on it.

First time he's said it so explicitly.

In this moment i am euphoric.