Ethereum co-founder Vitalik Buterin explained when rollup-based layer-2 platforms should go decentralized, and why “as soon as possible” is not the correct answer.

In a May 5 X post, Buterin said there is a right time for rollup-based scalability solutions to transition to a decentralized model. This moment depends on how low the proof system’s failure probability has fallen compared with the risks introduced by centralization.

Buterin’s thread came in response to a separate post by decentralized exchange Loopring founder and CEO Daniel Wang. Wang said in his thread that the maturity of a system matters to its security:

“Not all code is created equal. A rollup can be Stage 2, but running fresh code that’s never been tested under real stress.“

Rollup development is classified into stages: stage zero, stage one and stage two. Each stage is increasingly decentralized, with stage two being fully decentralized and trustless.

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Code that experienced war

Cryptocurrency systems that manage significant assets are exposed to profit-motivated bad actors worldwide. Even if a project does not feature a bug bounty program promising payments to people who find vulnerabilities, it is still taken apart under a microscope — it may just pay more for its faults.

This threat is growing as nation-state-backed bad actors increase their crypto activity level. One such example is the Lazarus hacking group, responsible for many high-profile hacks in the crypto space, including the $1.4 billion Bybit hack.

Wang suggested introducing a new metric for veteran code that survived the pressure of being exposed to highly motivated advanced hackers and hacker groups: “BattleTested.” The BattleTested badge would be awarded to a rollup that consistently secured at least $100 million of assets for at least six months, with at least $50 million in Ether (ETH) and a major stablecoin.

Also, this badge would be lost at every update, as the new code needs to survive the onslaught of attackers to earn it. Buterin commented on the analysis:

“A good reminder that stage 2 is not the only thing that matters for security: the quality of the underlying proof system matters too.“

Analyst at Kronos Research Dominick John told Cointelegraph that “to responsibly transition from stage 1 to stage 2, rollup teams must […] take a hard look at correlated risks like shared custody weaknesses or geopolitical chokepoints that can compromise the reliability of multisig security councils.” He said that such risks often go unnoticed until the locked value crosses $100 million. He added:

“The real green light for decentralization comes not when the proof system looks good on paper, but when it proves under real economic pressure that it’s more reliable than the potential for coordinated failures among council members.“

Related: Vitalik wants to make Ethereum ‘as simple as Bitcoin’ in 5 years

When to go decentralized?

Buterin said the best time for a protocol to go decentralized is when its onchain proof system is safe enough that the centralized components serving as a point of failure or collusion risk becoming the bigger threat. This is because until a system is proven to be secure enough, decentralization, which increases the reliance on this system, may end up making the system less secure.

Chart showing example rollup risk analysis per stage. Source: Vitalik Buterin

Mike Tiutin, chief technology officer at decentralized compliance protocol PureFi, told Cointelegraph that “going decentralized too early […] can leave users vulnerable.”

Kronos Research’s John said that “decentralization isn’t a race, it’s a long-term responsibility shared by the entire ecosystem.” He added that rushing to stage two puts ideology before safety and increases risks:

“In stage one, councils can step in if something breaks. In Stage 2, a single bug could wipe out billions with no rollback.”

While going decentralized right away is recognized as problematic, some experts highlight not going decentralized at all. Arthur Breitman, co-founder of the Tezos blockchain, told Cointelegraph that “prominent Ethereum L2s” are fundamentally custodial, adding:

“Privileged entities control core logic, jeopardizing asset integrity; banking on their immunity to collusion is fragile, and failure is likely to be correlated.“

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Tether AI, the upcoming artificial intelligence platform from the stablecoin giant Tether, will feature payments in major cryptocurrencies, including USDt and Bitcoin.

Tether CEO Paolo Adroino took to X on May 5 to tease the soon-to-come launch of Tether AI, the company’s new AI platform designed to offer “personal infinite intelligence.”

According to Ardoino, Tether’s AI platform will be integrated with USDt (USDT) and Bitcoin (BTC) payments, allowing users to make transactions directly through a peer-to-peer (P2P) network.

Source: Paolo Ardoino

The initiative builds on Tether’s December 2024 announcement that it was developing a website for the AI tool, targeting a launch by the end of the first quarter of 2025.

Support of “any hardware and device”

Ardoino emphasized that Tether AI will not use application programming interface (API) keys and will not depend on centralized control points.

Instead, Tether AI will offer a “fully open-source AI runtime” that will run on an “unstoppable peer-to-peer network,” and will be “fully modular and composable.”

Additionally, Tether AI will be capable of adapting and evolving on “any hardware and device,” he said.

P2P crypto payments enabled with WDK

The announcement also details that Tether AI’s P2P crypto payments will be “infused” with its open-source wallet development kit (WDK), launched in November 2024.

Tether’s WDK is a toolkit that enables developers to build mobile, desktop and web wallet applications, enabling self-custodial, or non-custodial, holding of USDt and Bitcoin.

An excerpt from Tether’s WDK announcement in November 2024. Source: Tether

Unlike custodial wallets, self-custodial wallet solutions allow users to gain complete control over assets, eliminating reliance on third-party custody solutions for completing transactions.

Tether doubles down on AI

Tether AI is part of a broader strategy to expand the company’s footprint in artificial intelligence.

In April 2024, Tether announced company restructuring to introduce new divisions beyond stablecoin development, launching Tether Data, a dedicated unit focused on AI and P2P development.

Related: OpenAI ignored experts when it released overly agreeable ChatGPT

In February, Ardoino announced that its AI division was working on a series of AI apps, including AI Translate, AI Voice Assistant and AI Bitcoin Wallet Assistant.

Source: Paolo Ardoino (X post translated by Google)

According to Ardoino, Tether AI has one key goal of providing the “ideal technological foundation” to achieve the vision of AI described by Isaac Asimov, one of the most influential science fiction authors about AI, known for works such as I, Robot, The Robot Series, and more.

“AI will, in the coming decades, become part of the very fabric of the universe,” Ardoino said in another X post written in Italian.

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OpenAI CEO Sam Altman’s digital identity project, World, formerly known as Worldcoin, faces challenges in Indonesia after local regulators temporarily suspended its registration certificates.

The Indonesian Ministry of Communications and Digital (Komdigi) has halted the Electronic System Operator Certificate Registration (TDPSE) for World and World ID over suspicious activity and alleged registration violations, the ministry announced on May 4.

After the suspension, Komdigi plans to summon World’s local subsidiaries, PT Terang Bulan Abadi and PT Sandina Abadi Nusantara, to provide clarification on the alleged violations, it stated.

According to a preliminary investigation, World’s PT Terang Bulan Abadi was allegedly operating without TDPSE, while PT Sandina Abadi Nusantara — the subsidiary World was using for providing its services — is allegedly involved in legal misrepresentation.

Indonesian law requires registration by all digital service providers

In the statement, Komdigi emphasized that all digital service providers in Indonesia must receive electronic registration in accordance with local laws.

Additionally, using another entity’s registration is considered a major breach of Indonesian digital operations law, the authority noted.

“Worldcoin services are recorded using TDPSE in the name of another legal entity, namely PT Sandina Abadi Nusantara,” Alexander Sabar, the Komdigi’s director general for digital supervision, said in the announcement, adding:

“Noncompliance with registration obligations and the use of the identity of another legal entity to carry out digital services is a serious violation.”

Community action required

According to Sabar, World’s temporary suspension in Indonesia is a measure taken to prevent potential risks to the community.

He mentioned that the digital ministry is committed to overseeing the digital ecosystem fairly and strictly to ensure the security of the national digital space.

Alexander Sabar is the head of Indonesia’s newly established Digital Space Monitoring Directorate General. Source: Komdigi

Sabar said proper supervision would require active participation from the community. “We invite the public to help maintain a safe and trusted digital space for all citizens,” he said. “Komdigi also appeals to the public to remain vigilant against unauthorized digital services, and to immediately report suspected violations through the official public complaint channel.”

The community response has been divided over the action by Komdigi.

“Good job Indonesia — at least somebody is standing up to that scam,” one Reddit user wrote.

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Others fired back, hinting at potential benefits stemming from World’s offering in Indonesia for the general public.

“If giving up your iris biometrics means you can feed your loved ones for a few weeks, that might be a trade worth making. In the end, it all depends on what matters most to you,” another Redditor said.

World’s latest news from Indonesia follows World’s debut in the United States in May 2025, with the platform rolling out its digital identity tech in six cities initially.

A number of global regulators were pushing back on World’s operations since its launch in July 2023, with governments like Germany, Kenya and Brazil expressing concerns over potential risks to the security of biometric data passed by users.

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