Ethereum co-founder Vitalik Buterin said on June 1 that synthetic assets and stablecoins could be built without relying on the forced liquidations that usually keep these systems solvent. His proposal uses an options-style structure designed to track a target value with ETH as collateral, while avoiding dependence on a centralized issuer.
Real-time oracles are the weak point in current designs
In a research post co-reviewed by Vladimir Novakovski and Curve developers, Buterin described the broader goal as creating crypto assets that follow a reference value such as the U.S. dollar, an inflation benchmark, or a commodity price. When the target is the dollar, he said, the challenge is the same one algorithmic stablecoins have tried to solve for years.
Most of those systems pair one market bet against an opposite one and use liquidation when price moves too far against a position. That mechanism prevents debt from exceeding collateral. But it also depends on price feeds that are both accurate and immediate. Buterin argued that this is where the design becomes fragile, writing that “real-time oracles are very hard to make safe” because they tend to rely on a small number of automated reporters, leave little room to fix errors, and shut out slower methods that could make oracle design cheaper and safer.
Split 1 ETH into two tokens instead of borrowing against it
His alternative is to make synthetics depend only on what he called “slow” oracles. Rather than borrowing against ETH, a user splits 1 ETH into two tokens whose combined value always adds back up to that same 1 ETH. The system checks the reference price only once, at a fixed date in the future, and then determines how the ETH is divided between the two pieces.
That change removes debt from the structure. Since the two tokens always sum to one whole ETH, no position can become undercollateralized in the usual sense, and nothing needs to be forcibly sold. Buterin said the setup resembles a prediction market, a type of product that has existed for years, so it can use the same kind of price feeds those markets already rely on instead of requiring instant pricing.
Users trade sudden wipeouts for gradual drift
The compromise is that holders will not maintain a perfect peg at all times. Instead of being wiped out in a liquidation event, they may see their exposure drift away from the exact value they want as time passes, and each user decides when to rebalance. The risk does not disappear. It changes form.
Buterin argued that this may be acceptable for people who want price stability rather than “simulated USD.” He also said the asset should not be treated as plain dollars for everyday payments or tax purposes. The proposal extends a recent series of public comments from Buterin, who has also pointed to zero-knowledge payments as a possible global standard for digital finance and has urged the Ethereum ecosystem to push harder on application-layer design.