The Bank of Italy has modeled what would happen to Ethereum’s security and payments capacity if its price drops to zero, treating the network as critical financial infrastructure rather than just a speculative crypto asset.
In a new research paper titled “What happens when Ether goes to zero? How market risk in cryptocurrencies becomes infrastructure risk,” Bank of Italy economist Claudia Biancotti examines how extreme price shocks in Ether (ETH) could impact Ethereum-based financial services that rely on the network for transaction processing and settlement.
Biancotti focuses on the relationship between the economic incentives of validators and the stability of the underlying blockchains used in stablecoins and other tokenized assets.
This paper models how validators who receive rewards in ETH would react if the price of the token crashed and the rewards lost sufficient value.
In that scenario, some of the validators could reasonably be terminated, Biancotti argues, which would reduce the total stake securing the network, slow block generation, and weaken Ethereum’s ability to withstand certain attacks and guarantee timely final transaction settlement.
When ETH price risk becomes infrastructure risk
Rather than treating Ether as a purely volatile investment, this study positions it as a core input to payment infrastructures used by a growing share of on-chain financial activity.
Related: Stablecoin risks appear to be minimal in Europe, with low penetration and MiCA: ECB
Biancotti argues that Ethereum is increasingly used as a payment layer for financial products, and a shock to the value of the native token could impact the reliability of the underlying infrastructure.
What would happen if the ether became zero? Source: bank of italy
This framework allows the Bank of Italy to track how the market risk of the base token evolves into the operational and infrastructure risk of the products built on top of it, from fiat-backed stablecoins to tokenized securities that rely on Ethereum for transaction ordering and finality.
Under such stress, the paper emphasizes, disruptions may not be limited to speculative trading, but may also spill over into payment and payments use cases, which are under increased scrutiny from regulators.
Related: IMF sets guidelines to address stablecoin risks beyond regulation
ECB warns about stablecoin spillovers
Other authorities, including the International Monetary Fund and the European Central Bank (ECB), have warned that large stablecoins could become systemically important and pose financial stability risks if they continue to grow rapidly and remain concentrated in a small number of issuers.
The ECB Financial Stability Review Report, published in November 2025, noted that due to the structural weaknesses of stablecoins and their association with traditional finance, severe shocks could cause bank runs, asset dumps (the rapid sale of reserve assets at depressed prices to meet redemptions), and deposit outflows, especially if adoption spreads beyond crypto trading.
The Bank of Italy has concluded that regulators face difficult trade-offs on whether and how supervised intermediaries should be allowed to rely on public blockchains for financial services.
It shows two options. Because current public chains rely on volatile native tokens, they can either be treated as unsuitable for use in regulated financial infrastructure, or their use can be allowed while imposing risk mitigation measures such as business continuity plans, contingency chains, and minimum standards for economic security and validators.
