Vitalik supports ETH treasuries… but warns about one serious risk.

A recent Bankless tweet discussed the recent increase in companies that are accumulating ETH as part of their treasury. Vitalik Buterin shared his view of the situation: he supports the idea of ETH treasuries, however he is not blindly bullish on it. According to Vitalik having companies hold ETH as part of their treasury allows more users to gain access to it, without having to use a wallet, exchange or DeFi protocol. As a result this will create more economic alignment across the ecosystem and also a path to wider adoption. And of course the more options are available for holding ETH, the stronger the network will be.

At the same time Vitalik shared an important note: it is not ETH treasuries themselves that are a threat, it is the leverage potential. Vitalik warned that if ETH treasuries transition to leveraging things could turn bad very quickly. In situations where companies begin borrowing against their ETH holdings and the price drops, the pressure to liquidate positions could lead to a cascade of forced liquidations. We witnessed scenarios like this play out time and time again and they never end well.

We should not ignore this possibility. For reference publicly traded companies like BitMine were reported to hold almost 4 million ETH which represents 3% of the total ETH supply. This level of influence and risk becomes too real once debt is added into the equation, so the conclusion is pretty easy to draw. Having more access to ETH is a good thing but turning ETH into a house of cards is not. An increase in long-term holders will make Ethereum less fragile.

Source: https://x.com/Bankless/status/2004587304636359056