How would Vitalik Buterin build his dream stablecoin?
According to Ethereum co-founder, Vitalik Buterin, stablecoins have an immense amount of potential to act as a cross-chain bridge and also offer the type of interoperability the blockchain space has always been lacking. While he may have a fair point, there are also counter arguments to this type of model as well as misaligned incentives.
To begin with, most people who have recently poured money into the stablecoin industry, such as traditional venture capitalists or traders who seek a margin do not have a deep understanding of the underlying blockchain technology that powers this ecosystem. And to be frank, we’re not 100% sure that these new market entrants really care about the individual nodes, or what an actual hash is and how it comes about. This sentiment is also supported by Bitcoin activist, Udi Wertheimer. So, right off the bat we have misaligned incentives as the people who are investing money into the ecosystem are seeking different things than the technologists responsible for building the ecosystem. Having stakeholders with a difference of opinions is common in business, especially with emerging industries. But when the incentives are misaligned, it can become difficult to unilaterally move in the same direction — often causing stagnation or a flattened curve during vital moments of innovation.
In addition to misaligned incentives amongst external stakeholders, the internal providers of stablecoins also view their roles and responsibilities differently. This mindset is mirrored in the tech industry, as companies such as Facebook and Google are often scrutinized for not taking enough responsibility in being a media company. Instead, they cling onto the fact that they are merely tech platforms. For Tether, the makers of USDT — the current stablecoin with the highest trading volume and market cap, a similar approach is taken. For Paolo Ardoino, Tether’s Chief Technical Officer, interoperability amongst cross-chains should be the job for third party providers. In his eyes, Tether is merely the provider of the underlying technology, whereas the usability of it should be built by third parties, the way Apple is only responsible for the app store rather than the apps which make the ecosystem.
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