Ethereum co-founder Vitalik Buterin, believes that blockchain projects often reveal the moral foundation and ethical values of their creators. Buterin claims that decentralized applications make their impact based on what developers purpose to construct. Specific blockchain projects concentrate on investment speculation but maximizes transparency and innovation.

In a recent discussion on Warpcast, Buterin scrutinized Pump.fun and Terra platforms. According to him these platforms demonstrate poor practices that the crypto industry should avoid. During his discussion Buterin emphasized that blockchain products need proper ethical standards. User protection along with sustainable growth is crucial to achieve ethics in decentralized applications (dApps). 

Developer Ethics Are Key to dApps Design; Vitalik Buterin

Buterin believes that developers’ beliefs create the fundamental purposes for which they create blockchain applications. According to him “the differences in what the app does stem from differences in beliefs in developers’ heads about what they are here to accomplish.”

Buterin insists that hype-based apps tend to lead to negative consequences for their users. The majority of these apps fail to establish either state-focused missions or follow ethical practices. The short-term popularity attracts users but they fail to deliver sustainable high value.

Strongly founded blockchain projects make user protection, system decentralization and operational transparency their primary development focus. The core design of Ethereum showcases such core intentions according to the co-founder. According to Buterin, before Ethereum shifted to proof-of-stake, it took time because the move focused on addressing environmental concerns and implementing ethical objectives.

Pump.fun, Terra, and FTX Highlight Risks of Poor Intentions

In his argument, Vitalik Buterin identified Pump.fun, Terra Luna and FTX as examples of platforms that builders should avoid reproducing. According to Buterin, the flaws in each of these projects stem from design philosophy errors.

Pump.fun, for example, is a Solana-based platform that enables users to create tokens without strict supervision measures. The platform promotes speculative trading that puts inexperienced users at a risk of losses.

Terra Luna, which reached over $40 billion before its collapse in May 2022, is yet another failure. The projects’ token (UST), which served as an algorithm stablecoin, depegged against the US dollar. This crash triggered a wipe-out of $60 billion worth in market value, as per Coinmarketcap data. 

Additionally, FTX became one of the largest centralized exchange failures following its collapse in November 2022. Reports by the SEC and court proceedings reveal the mismanagement of user funds. Notably, the collapse of FTX resulted in users losing more than $9 billion. Buterin believes that the failure of all these projects was caused by lack of strong ethical values by the developers. 

Ethical Blockchain Projects Praised by Buterin

During his discussion, Buterin showcased multiple projects that adhere to Ethereum’s anticipated development direction. The apps target privacy features as well as governance solutions and responsible innovation elements. Among these blockchain applications are Railgun, Privacy Pools, Farcaster and Polymarket. 

Railgun serves as a privacy-oriented protocol to conduct private DeFi transactions using zero-knowledge cryptography. The platform is an alternative mixer as it allows users to preserve the confidentiality of their trading data in their interactions with smart contracts. Railgun offers advanced encryption without compromising the core operational framework.

On the other hand, Privacy Pools extends Tornado Cash’s functionality to include features which ensure compliance. Through this service users can demonstrate the legitimacy of their crypto operations without exposing personal information. Buterin echoes this approach as it protects individuals’ privacy and provides operational security.

Additionally, Farcaster provides a decentralized social networking system which establishes user control together with socio-political autonomy. Through this protocol users maintain complete authority over their accounts and information while ensuring uninterrupted access on different linked applications. The platform makes its operations scalable by using minimal on-chain data while authenticating users with crypto-related security methods.

Finally, Buterin sees Polymarket as a well designed platform. Such a platform boosts governance, journalism and scientific research in a truth-based manner.

Buterin Claims Blockchain Needs Ethical Design

Buterin’s message serves as a warning and a call to action. The absence of moral guidelines in blockchain projects’ development erode user trust and disrupt the credibility of the blockchain ecosystem. The failures of Terra Luna and FTX suggest clear consequences of projects that do not meet ethical standards.

As per the argument by Buterin, all crypto developers should create projects focused on maintaining user safety while implementing decentralized features together with control mechanisms. Ethereum’s development trajectory showcases an ethical practice to solve this issue.

The lack of ethical practice among developers results in unstable crypto projects which  are not sustainable in the long run. For the crypto industry to maintain its sustainability, developers need to concentrate on utility, privacy, and security.