- ETH adoption in corporate treasuries provides structured access for companies and supports broader market participation.
- Buterin warns overleveraged ETH treasury products could cause cascading liquidations in a 30–90% price drop scenario.
- Responsible participants and clear rules make ETH treasury vehicles safe; risks arise only if leverage exceeds limits.
Vitalik Buterin addressed the growing use of ETH in corporate treasuries during a recent discussion, stating that Ethereum gaining acceptance as a treasury asset is useful and provides access options for companies.
He added that expanded access helps participants who need structured vehicles to hold ETH. However, he also warned that excessive leverage inside treasury structures could trigger cascading liquidations if prices fall.
ETH in Treasuries Called “Good and Valuable”
Vitalik Buterin said the social coordination around ETH as a treasury asset “is good and valuable.” He stated that companies holding ETH through treasury vehicles offers participants more structured access.
According to him, different formats allow users with varied financial conditions to participate. He noted that these offerings meet requirements that differ from direct self-custody or long-term holding.
Warning About Overleverage in Treasury Structures
However, Buterin warned that problems could emerge if leverage accelerates inside these products. He said that a three-year scenario where ETH treasuries fail would likely involve overleverage.
He described a chain reaction where a 30 percent decline could force liquidations. That pressure could deepen the drop to 50 percent, then 70 percent, and possibly 90 percent, alongside credibility loss. He stated that this would not stem from the idea of treasuries but from leverage exceeding safe limits.
Differentiating From Past Failures and Noting Boundaries
Buterin said the current participants in Ethereum finance are “responsible people” and not comparable to cases like Do Kwon. He noted that derivatives can function without destabilizing Ethereum if leverage stays controlled.
He also said that ETH-based access vehicles are acceptable when backed by clear rules. Buterin repeated that risk emerges only when leverage grows beyond manageable levels.
