Vitalik Buterin: Crypto must build real value or face the “doomsday script” of pure speculation

TLDR:

Ethereum's gas cap has increased from 30 million to 60 million, but despite progress, meaningful applications are rare.
Buterin earned $70,000 in Polymarket's prediction market experiments against irrational market sentiment.
Oracle fraud incident exposes how single Web2 posts can determine multi-million dollar on-chain settlement results.
Ethereum acts as a defense against AI centralization by giving permissionless access to humans and AI agents.

Vitalik Buterin is back in Chiang Mai with great observations about the evolution of blockchain technology and potential pitfalls.

In a recent interview, Ethereum's founder shared his concerns about the growing divide between technological advancement and meaningful application development.

He expressed concern that the crypto industry could devolve into pure speculation without building real-world value, warning that this outcome would ultimately lead to the collapse of the sector.

Technological advancement masks application layer struggles

Ethereum has achieved impressive technical milestones in the past year, Buterin explained. The gas cap of the network has increased from 30 million to 60 million, with big plans to reach 300 million in the coming period.

Zero-Knowledge Ethereum Virtual Machine implementations have been successfully deployed, while wallet infrastructure has seen significant improvements.

Despite these technical achievements, Buterin identified troubling patterns at the application layer. “The biggest change is that I see a big difference between technology and application,” he said during the interview.

The community once held diverse visions for decentralized autonomous organizations and applications that could shape social cooperation. Many developers have abandoned these original missions, he pointed out.

The explosion of memecoins represents this change, with the end of Donald Trump's tokenization, which Buterin sees as emblematic of the industry's current challenges.

Prediction markets emerged as the only notable success story in 2025, but this success has its limitations. Platforms like Polymarket focus on short-term betting situations rather than meaningful long-term applications.

“In theory, prediction markets are successful as a tool, but we need more meaningful applications,” Buterin explained.

He argues for models of governance such as Robin Hansen's futarchy, in which citizens vote on goals while prediction markets determine policy. MetaDAO currently explores this approach.

Oracle vulnerabilities expose critical infrastructure weaknesses

Buterin defied irrational market sentiment and revealed that he made $70,000 from a $440,000 investment in Polymarket.

“My approach is simple: I look for markets that are in crazy mode and bet that crazy things won't happen,” he explains. When market sentiment reaches irrational extremes, contrarian positions often show profitability.

However, it highlighted a major vulnerability in Oracle's system that threatens the ecosystem of the entire prediction market.

Ukraine's battlefield prediction market demonstrated this risk when an employee of the Institute of War Research allegedly leaked information about Russian control of a railway station.

This event has changed the 5% chance event to a specific outcome, which may trigger improper payouts. Buterin emphasized that current word-of-mouth sources from the Web2 forums “never thought that the message they sent would determine ownership of $1 million on the chain.”

According to Buterin, there are two main remedies for oral problems. Centralized models rely on trusted entities like Bloomberg for accurate information. Decentralized approaches use token voting as implemented by the UMA protocol.

However, UMA faces declining confidence due to flaws in game theory in which large shareholders can manipulate voting outcomes. “I always hope that we will find a better solution in the future,” Buterin said. Chainlink dominates the current DeFi landscape despite its complex and centralized operations.

Ethereum is positioned as a hedge against AI centralization

Buterin describes three main reasons that drive his current work. “Now my biggest fear is the future: the whole industry will eventually be reduced to 100% speculation, only speculation, no application,” he explained.

To avoid this fate, it is crucial to build better decentralized organizations and applications across sectors.

Ethereum serves as a permissionless global computer where people, companies and AI agents have equal access rights.

AI can hold assets, conduct transactions and participate in management on the platform. “Back to the basics, Ethereum is a decentralized global computer,” Buterin explained.

Potential applications include issuing bank accounts to AI agents, improving prediction markets, and verifying the authenticity of content.

Buterin identified the application layer as Ethereum's biggest overlooked risk rather than technical weaknesses. He envisions Ethereum to be the centerpiece of decentralized applications in all sectors, not just finance.

The platform should provide true ownership where users can control their assets without corporate intermediaries. “If we have the strongest decentralized technology and we just use it to build a lot of toys or casinos, that's the biggest risk,” he warned.