Vitalik Buterin Endorses Ethereum Treasury Firms—But Drops a Bombshell on Leverage Dangers

Ethereum co-founder Vitalik Buterin just threw his weight behind treasury management firms building on ETH—but with a stark warning that could rattle DeFi degens.

Leverage: The double-edged sword

While praising protocols that help DAOs and projects manage crypto treasuries, Buterin fired a shot across the bow at overzealous leverage strategies. "It's not free money"—a phrase that should be tattooed on every yield farmer's forehead.

The irony? This comes as Ethereum-based treasury products hit record TVL while traditional finance still can't tell a smart contract from a Netflix subscription. Maybe Wall Street will figure it out by the next bull run—or maybe they'll just launch another leveraged ETF that blows up spectacularly.

Caution over “overleveraged game”

While supportive, Buterin warned that unchecked leverage could destabilize the market. He said that in a worst-case scenario, a sharp drop in ETH’s price could trigger forced liquidations across treasury firms, accelerating the decline and eroding confidence in the token.

“If you woke me up 3 years from now and told me that treasuries led to the downfall of ETH… my guess WOULD be that they turned into an overleveraged game”

— Vitalik Buterin, Ethereum co-founder

Drawing a contrast with the 2022 collapse of Terra, Buterin suggested that ETH investors were better positioned to avoid reckless practices, saying, “These are not Do Kwon followers that we’re talking about.”

ETH traded at about $3,930 at the time of the interview, with the treasury trend continuing to grow in parallel with similar strategies seen in Bitcoin (BTC), where public firms have become major holders of the cryptocurrency.