Having navigated the crypto space for over a decade and witnessed countless waves, a research report released by the Italian Central Bank last year prompted me to seriously consider a question—what happens when Ethereum, as the settlement infrastructure for crypto finance, collapses?

The report simulated an extreme downside scenario for ETH. This underlying network, supporting an ecosystem with a market cap of over 800 billion USD, could trigger a global financial chain reaction if issues arise. This is not alarmism but a systemic risk that every token holder should take seriously.

Let’s first look at the current situation. Ethereum has become the "settlement hub" of crypto finance. Over 1.7 million assets are circulating on-chain, and stablecoins worth 140 billion USD depend on this chain for operation. Traditional financial institutions are also beginning to focus on its low-cost clearing and settlement capabilities. However, the security mechanism of this system has a fatal flaw.

Tens of thousands of validator nodes worldwide maintain network security. Their incentive comes from earning ETH rewards. The problem is—ETH itself is not backed by any real assets. This creates a circular dependency: nodes participate in validation to earn tokens, and the token’s value depends entirely on the network’s security level. What happens if this cycle breaks?

Imagine ETH experiences a sharp decline or even an extreme market event. A large number of validator nodes might exit due to insufficient rewards, leading to slower block production, lowered security thresholds, and increased vulnerability to attacks—such as "double-spending" (spending the same funds twice). The risk of such attacks would significantly increase.

Risks could also spill over. Stablecoins serve as a bridge between crypto and traditional finance. By 2025, there will be over 46.2 million active stablecoin users in the Eurozone alone. If the Ethereum network were to become paralyzed, these users could face a bank run, with rapid capital outflows, potentially destabilizing the entire financial system.

Will ETH go to zero? The probability is extremely low. But a sharp decline is entirely possible—for example, dropping to 800-1200 USD during a bear market, which would be a heavy blow for holders.

The fundamental issue is that the "using tokens to maintain security" infrastructure model itself is fragile. In traditional finance, a significant asset decline wouldn’t collapse the settlement system, but here, market risk and infrastructure risk are one and the same—this is a unique systemic flaw in the crypto space.

Every DeFi token and NFT you hold is built on this foundation. Central banks worldwide are monitoring this risk point, and the industry should also work to patch these vulnerabilities. Instead of chasing high prices and selling low, understanding that underlying security is the ultimate safeguard.