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What if Ether goes to zero? How market risk becomes infrastructure risk in crypto

Author

Listed:
  • Claudia Biancotti

    (Bank of Italy)

Abstract

Permissionless blockchains, the most common type of settlement infrastructure in crypto, attract increasing attention from the traditional financial sector. Adoption may offer cost and speed advantages vis-à -vis legacy solutions. There is, however, an oft-overlooked, tight link between volatile crypto prices and infrastructure availability and security. Permissionless blockchains are operated by decentralized sets of independent validators, usually compensated in unbacked cryptoassets known as native tokens. Should such tokens incur a substantial and persistent loss in market value, validators might leave. Transaction settlement could slow down or halt entirely, and the infrastructure’s exposure to cyber attacks would increase.

Suggested Citation

  • Claudia Biancotti, 2026. "What if Ether goes to zero? How market risk becomes infrastructure risk in crypto," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 74, Bank of Italy, Directorate General for Markets and Payment System.
    • Handle: RePEc:bdi:wpmisp:mip_074_26
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    File URL: https://www.bancaditalia.it/pubblicazioni/mercati-infrastrutture-e-sistemi-di-pagamento/approfondimenti/2026-074/N.74-MISP.pdf
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    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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