What to Know:
- Ethereum is evolving toward safer, low-risk DeFi and creative new applications.
- ZKID and AI could make finance more private, fair, and accessible.
- Some centralization is needed, but decentralization remains key for trust.
At the Global On-chain Asset Summit in Singapore during TOKEN2049, Ethereum co-founder Vitalik Buterin sat down with Xiao Feng, CEO of HashKey Group, to talk about where Ethereum is headed and how innovations like zero-knowledge identity (ZKID) and AI might reshape finance.
Ethereum’s Next Phase
Vitalik opened with a clear view: he sees Ethereum going in two directions at once. First is what he calls “low-risk DeFi”: basic financial services that we already understand holding tokens, lending, trading, swapping. He explained that in earlier days, DeFi was risky and filled with hacks. But today, the sector has matured. Losses that once were a big problem have dropped dramatically.
The second direction is creative, experimental applications, things beyond plain finance. Vitalik mentioned prediction markets, identity systems, and more. These are riskier, but they could lead to breakthrough use cases. He emphasized that both paths matter: one offers steady, reliable financial utility, and the other offers the possibility of “what comes next.”
Why Low-Risk DeFi
Vitalik pointed out that one big indicator of progress is that hacks and losses have become much rarer. In 2019, significant percentages of DeFi’s total capital were lost to vulnerabilities. Now, those numbers are much smaller.
He gave examples like stablecoins and platforms that pay out small amounts (3–4%) in USD or EUR. These kinds of services are already available in traditional banking, but blockchain makes them open and available to everyone, no matter where they are. Vitalik even said that low-risk DeFi is like how search engines became the stable backbone of Google. In the same way, reliable financial services could become Ethereum’s stable economic base.
ZKID: Identity Without Revealing All
One of the most interesting parts of their conversation was about ZKID, or zero-knowledge identity. Vitalik believes identity and privacy are key challenges for the future. Centralized identity systems get hacked, data leaks, and trust breaks.
ZKID could help people prove something about themselves without revealing every detail. He discussed how combining ZK proofs with AI might allow undercollateralized loans, meaning people could get loans without having to put up full collateral, based on a more private reputation system.
He also said many future apps will mix financial and non-financial elements. Social networks, for example, might integrate payments or token features. These boundary-blending apps might be riskier, but also full of creative potential.
Trust and AI Payments
Xiao Feng asked about how decentralized these systems need to be. Vitalik acknowledged that some centralization is inevitable in many use cases. But he warned that we shouldn’t ignore decentralization entirely at the application level, either; users still need safeguards.
On AI and payments, Vitalik predicted that over the next 5 to 10 years, AI will play a role in handling payments. For small amounts, AI might be enough. For big transactions, human oversight will still be necessary. AI could also help with risk control, spotting suspicious transactions.
What It All Signals
Ethereum is getting closer to a more mature stage, where safety and dependability are the most important things in DeFi. New technologies like ZKID and AI could make it possible to have private but trustworthy access to money. The line between “finance” and “other apps” is getting less clear, which could lead to more hybrid products. Decentralization will stay in balance, but users will want strong guarantees.
Vitalik’s comments make it clear that Ethereum isn’t just following the latest trend. It wants to create a long-lasting base by combining old and new ideas. He paints a picture of a future where finance is more open, identity protects privacy, and technology helps people in smarter ways.
