- Vitalik Buterin warned institutional influence, like from BlackRock, could harm Ethereum’s core values.
- Institutional holdings of Ether exceed $36 billion, representing a growing share of Ethereum’s supply.
- Buterin highlighted two main risks: alienating decentralization-focused developers and enforcing technical changes favoring institutions over ordinary users.
- Technical choices such as very fast block times could restrict node operation geographically and financially.
- Maintaining Ethereum’s global, permissionless, and censorship-resistant nature requires a committed core community.
Vitalik Buterin, co-founder of Ethereum, cautioned about rising institutional influence during a panel at the Devconnect conference in Buenos Aires. He expressed concerns over the growing ownership of Ether, Ethereum’s cryptocurrency, by major asset managers like BlackRock. This trend poses significant risks to Ethereum’s foundational principles of decentralization and openness.
Currently, nine Wall Street firms offering Ethereum exchange-traded funds (ETFs) hold over $18 billion in Ether. Treasury companies add another $18 billion to that total. Analysts predict that institutions could soon control more than 10% of Ethereum’s entire supply, according to data referenced from Coinglass and Strategic Eth Reserve.
Buterin identified two main threats from this institutional accumulation. First, it may drive away developers and community members who value Ethereum for its transparent, permissionless architecture rather than financial gains. “It easily drives other people away,” he remarked, emphasizing how this shift could erode the technical expertise and ideological commitment that underpin Ethereum’s decentralization.
Second, institutional priorities could push Ethereum toward technical modifications that exclude regular users. For example, adopting 150-millisecond block times—block interval times optimized for institutional trading—could make it unfeasible for normal node operators to participate unless they have ultra-low latency connections in financial hubs like New York City. This would increase geographic centralization and limit node operation to expensive data centers, contrary to Ethereum’s goal of broad accessibility.
Buterin suggested the solution lies in focusing on areas that are scarce: “global, permissionless, and censorship-resistant protocol,” areas where Ethereum holds unique value. Unlike traditional Wall Street systems optimized for speed and efficiency, Ethereum’s strength is being a global system open to anyone without needing permission or trust, as described in the Trustless Manifesto. He stressed the importance of maintaining a strong core community aligned with these principles rather than adapting Ethereum primarily for institutional needs.
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