Ethereum Co-Founder Vitalik Buterin Weighs in on Public Companies Holding Ether
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Ethereum co-founder Vitalik Buterin has expressed his support for public companies holding Ether as part of their treasuries, citing the benefits of increased adoption and accessibility. However, he also cautioned against the dangers of excessive borrowing, which could destabilize the market.
Ethereum Treasury Firms Provide Valuable Services
In a recent Bankless podcast interview on August 7, Buterin highlighted the positive impact of Ethereum treasury firms. These companies raise capital to purchase and hold large quantities of Ether, providing indirect access to the asset for more investors. By holding shares in treasury firms rather than ETH directly, companies create “more options” for those with different financial needs.
The Growing Trend of ETH Treasuries
Currently, Ethereum treasury firms collectively control 3.04 million ETH, equivalent to about 2.5% of the total supply. This is valued at around $12 billion, according to Strategic ETH Reserve data. The top three treasury firms are Bitmine Immersion Technology with 833,000 ETH, SharpLink Gaming with 521,000, and The Ether Machine with 345,000.
The Risks of Unchecked Leverage
While Buterin is supportive of the trend, he warned against the dangers of unchecked leverage. If treasury firms become overleveraged, a sharp drop in ETH’s price could trigger forced liquidations, accelerating the decline and eroding confidence in the token. In a worst-case scenario, this could even lead to the downfall of ETH.
“If you woke me up 3 years from now and told me that treasuries led to the downfall of ETH… my guess would be that they turned into an overleveraged game,” Buterin said.
A Different Story from Terra’s Collapse
Buterin drew a contrast with the 2022 collapse of Terra, suggesting that ETH investors are better positioned to avoid reckless practices. “These are not Do Kwon followers that we’re talking about,” he said.
ETH’s Growing Adoption
At the time of the interview, ETH traded at around $3,930, with the treasury trend continuing to grow in parallel with similar strategies seen in Bitcoin. As more public firms become major holders of cryptocurrencies, the trend is expected to continue, driving further adoption and growth in the market.
The Future of Ethereum
As Ethereum continues to evolve, it’s clear that the trend of public companies holding Ether is here to stay. With Buterin’s support and caution, the community is well-positioned to navigate the risks and benefits of this growing trend. As the market continues to mature, it will be exciting to see how Ethereum treasury firms shape the future of the token and the broader cryptocurrency landscape.