Vitalik proposed replacing CDPs with options-based index-tracking assets, using slow oracles to reduce reliance on real-time price feeds that have proven vulnerable to manipulation.
Posted June 2, 2026 at 3:23 am EST.
Ethereum co-founder Vitalik Buterin published a research post on the Ethereum Research forum Monday titled “Building index-tracking assets on top of options instead of debt,” proposing that DeFi swap out one of its foundational primitives — collateralized debt positions — for an options-based architecture designed to absorb market shocks rather than amplify them.
“What if we use options as the base of DeFi, instead of CDPs and liquidations?” Buterin asked in a post on X. “Instead of extreme price movements creating a sharp and global ‘you get liquidated’ effect, instead your position smoothly rebalances over time.”
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Under today’s DeFi model, users typically borrow against crypto collateral to mint synthetic assets or stablecoins like DAI. If collateral value falls too quickly, smart contracts automatically liquidate positions, often triggering cascades of forced selling during market stress. Buterin’s proposed alternative would let users hold contracts linked to a price index (called T in the proposal, examples include USD/ETH or CPI-based measures), split into two parts labeled P and N that together always equal the original ETH deposited. As the index moves, the position rebalances dynamically without triggering a liquidation event.
The architectural shift addresses a problem that has cost DeFi users billions: real-time oracle vulnerability. Every CDP-based liquidation depends on a fast price feed reporting current asset prices accurately and instantly, with no margin for error and no dispute window. Buterin has been increasingly vocal about the fragility of this design. “Real-time oracles can only rely on a small number of automated actors watching live price feeds, and they leave no room for dispute resolution or slow verification,” he wrote. The April 2026 Polymarket weather sensor manipulation — in which a trader allegedly netted $34,000 by manipulating a Paris weather sensor with a hair dryer — was a concrete demonstration of how a single data source can be gamed.
An options-based architecture would let DeFi rely on slow oracles similar to those used by prediction markets, with time for dispute resolution and verification. “Slower oracles may reduce the need for protocols to act on price updates within seconds,” Buterin wrote, calling the design “options-based, slow-oracle-friendly DeFi.” The framework would also allow users to gain exposure to personalized baskets of value rather than single fiat currencies, a structural departure from the stablecoin model that has dominated DeFi for nearly a decade.
Buterin flagged limitations. Rebalancing slippage is a significant practical challenge: options-based positions tied to indices require periodic rebalancing, and every rebalance executes a trade. On the Ethereum mainnet, gas costs and slippage could erode gains, particularly for smaller positions. Users would also need to actively manage their exposure over time. The proposal is explicitly an early-stage research thread rather than a deployment plan, but it signals the next direction of Buterin’s “low-risk DeFi” thesis, which he first laid out in detail in a September 2025 blog post arguing that low-risk DeFi is essential to Ethereum’s economic backbone.
