#ShareYourUSStocksWinNvidia


Vitalik Buterin Proposes a New DeFi Model Based on Options, Eliminating Liquidation Risks

Vitalik Buterin launched a new proposal on June 1, 2026, to overhaul decentralized finance (DeFi) architecture by shifting from collateral-based debt models to an options contract-based system. This idea, published on the Ethereum Research forum, aims to eliminate the forced liquidation risk that has been a major weakness of DeFi protocols over the past half-decade.
​Vitalik designs a mechanism where one ETH unit can be split into two option assets (P and N) with the same strike price and expiration date. Since the total value of the asset pair always sums to one ETH, this system automatically guarantees solvency without the need for potentially failing liquidation auctions during extreme market volatility. With this design, the system no longer requires price updates at each block but relies on settlement at maturity, allowing protocols to use more efficient oracles similar to those used in prediction markets.
​Although this model is seen as a significant advancement in DeFi mechanism design, Buterin warns of operational challenges related to slippage when users rebalance their positions. He suggests developing a dedicated market structure to mitigate this risk so that it remains competitive with traditional Automated Market Makers (AMMs). Currently, the proposal is still in the research stage, and no protocol has officially committed to implementing it on the mainnet.
ETH-7.97%
View Original
post-image
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • 6
  • Repost
  • Share
Comment
Add a comment
Add a comment
CryptoDiscovery
· 1h ago
To The Moon 🌕
Reply0
HighAmbition
· 1h ago
Just charge forward 👊
View OriginalReply0
MasterChuTheOldDemonMasterChu
· 1h ago
Steadfast HODL💎
View OriginalReply0
MrFlower_XingChen
· 2h ago
To The Moon 🌕
Reply0
Ryakpanda
· 2h ago
Hop on now!🚗
View OriginalReply0
Ryakpanda
· 2h ago
Just charge forward 👊
View OriginalReply0
  • Pinned