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In a new stress test, the Bank of Italy explored how an extreme market shock in Ethereum could propagate through the system and amplify ether infrastructure risk. Bank of Italy models Ether-to-zero scenario The Bank of Italy modeled what would happen to Ethereum’s security and settlement capacity if the price of Ether fell to zero, treating the network as critical financial infrastructure rather than just a speculative crypto asset. This approach marks a shift from viewing ETH only as an investment toward assessing its role in core financial plumbing. In a research paper titled “What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Crypto,” Bank of Italy economist Claudia Biancotti examined how an extreme price shock in Ether could affect Ethereum-based financial services that rely on the network for transaction processing and settlement. Moreover, Biancotti focused on the link between validators‘ economic incentives and the stability of the underlying blockchain used by stablecoins and other tokenized assets. The paper models how validators, who are rewarded in ETH, might respond if the token’s price collapsed and their rewards lost value. That said, the analysis is theoretical and does not predict an actual price path for Ether, but rather tests system resilience under an extreme stress scenario. Validator exit and network security under stress In the modeled scenario, a portion of validators would rationally exit, Biancotti argues, which would reduce the total stake securing the network. As a result, block production would slow and Ethereum’s ability to withstand certain attacks and guarantee the timely, final settlement of transactions would weaken. However, the paper stresses that the extent of the deterioration would depend on how many participants stopped validating. By analyzing validator economic incentives, the study shows how ETH price risk can migrate into operational vulnerabilities. If staking rewards,…

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Filed under: News - @ January 12, 2026 5:25 pm