A Bank of Italy research paper warns that a significant Ethereum price collapse could severely impair the blockchain's ability to settle transactions, potentially freezing over $800 billion in assets. Authored by Claudia Biancotti, the paper outlines a scenario where a drop in ETH's price degrades the security infrastructure, leading to a breakdown. This breakdown could compromise tokenized stocks, bonds, and stablecoins increasingly placed on public ledgers by financial institutions. The report challenges the assumption that regulated assets on public blockchains are insulated from the underlying cryptocurrency's volatility. The paper highlights the reliance on validators motivated by profit, whose revenue, denominated in ETH, could fall below operating costs, leading to a potential "downward price spiral".

A Bank of Italy research paper warns that a significant Ethereum price collapse could severely impair the blockchain's ability to settle transactions, potentially freezing over $800 billion in assets. Authored by Claudia Biancotti, the paper outlines a scenario where a drop in ETH's price degrades the security infrastructure, leading to a breakdown. This breakdown could compromise tokenized stocks, bonds, and stablecoins increasingly placed on public ledgers by financial institutions. The report challenges the assumption that regulated assets on public blockchains are insulated from the underlying cryptocurrency's volatility. The paper highlights the reliance on validators motivated by profit, whose revenue, denominated in ETH, could fall below operating costs, leading to a potential "downward price spiral".