Vitalik Buterin Expresses Support for ETH Reserve Company, but Warns that Excessive Leverage Could Lead to Collapse

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Supporting ETH Reserve Model: Offering More Choices for Investors

Vitalik Buterin believes that the emergence of these so-called “Ethereum reserve companies” provides investors from various financial backgrounds with a new way to access Ether. “These companies do provide valuable services. For some, investing indirectly in ETH reserve companies is more feasible than directly holding ETH, which has led to a more diversified market.” ETH reserve companies are currently one of the hottest trends on Wall Street, raising billions to specifically buy and hold cryptocurrencies long-term, allowing traders to access crypto assets indirectly through the stock market. The most popular targets are Bitcoin and Ether.

Warning: Leverage Must Not Become the Trigger for ETH Collapse

Despite supporting this trend, Vitalik Buterin also issued a warning. He pointed out that the future of ETH must not be built on the risks of excessive leverage. “If you wake me up three years from now and tell me that ETH reserves caused the collapse of Ether, the only reason I can think of is: these companies turned ETH into a leverage game.” He further explained that if a drop in ETH prices triggers leverage liquidations, it could lead to a chain reaction, causing ETH prices to plummet further, trust to collapse, and ultimately devastate the entire ecosystem. However, he also added that the current ETH investors have a relatively mature risk awareness and are unlikely to repeat the mistakes of the Luna collapse: “We’re not talking about followers of Do Kwon (the founder of Terraform Labs) here.”

Ethereum Reserve Companies’ Total Assets Near $12 Billion

According to the latest data, the market value of ETH held by public companies has reached $11.77 billion, with the three largest companies being:

• BitMine Immersion Technologies: holds 833,100 ETH, valued at approximately $3.2 billion, making it the 4th largest crypto asset holder among all public companies.
• SharpLink Gaming: holds ETH valued at $2 billion.
• The Ether Machine: holds ETH valued at $1.34 billion.

In addition, the Ethereum Foundation and PulseChain are also among the top five entities holding ETH.