According to the source, Ethereum co-founder Vitalik Buterin says crypto needs better decentralized stablecoins, consistent with his prior guidance that resilient designs should withstand extreme market conditions and avoid heavy reliance on centralized collateral, source: Vitalik Buterin blog at vitalik.ca, Two thought experiments to evaluate automated stablecoins. For trading, monitor market share and supply shifts between centralized stables USDT and USDC and decentralized alternatives DAI, FRAX, LUSD and RAI to gauge on-chain risk appetite and potential ETH fee demand, source: DefiLlama Stablecoins dashboard; Ethereum.org DeFi resources. For DAI, track Peg Stability Module usage and Real-World Asset collateral that increase or reduce USDC dependence, which can affect decentralization risk and MKR policy decisions, source: MakerDAO documentation; MakerDAO governance forum. For FRAX, watch the collateralization ratio, Algorithmic Market Operations and sFRAX yield settings that influence FRAX supply growth and veFXS incentives, source: Frax Finance documentation; Frax governance. For LUSD, focus on ETH-only collateral health, Stability Pool utilization, and redemption dynamics that support the USD peg without centralized assets, source: Liquity protocol documentation. Governance tokens tied to these systems MKR, FXS and LQTY can react to parameter changes that impact fee capture and risk, so track on-chain proposals and execution, source: MakerDAO governance portal; Frax governance; Liquity documentation.

According to VitalikButerin, he has concerns about the LUSD design, specifically highlighting the necessity of the possibility of negative interest rates.