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

Claudia Biancotti

No 74, Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) from Bank of Italy, Directorate General for Markets and Payment System

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.

Keywords: permissionless blockchains; cryptoassets; financial infrastructure; cyber risk (search for similar items in EconPapers)
JEL-codes: G15 G23 O3 (search for similar items in EconPapers)
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wpmisp:mip_074_26

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