This is a thought provoking statement for a Sunday. Centralization risk is the ‘elephant in the room’: i) If ETH’s economic security (staked ETH) is dwarfed by the total value of stables it secured, there’s a theoretical imbalance. But some may initially think that stables are just tokenized RWAs (USD mostly). Controlled centrally by Tether, Circle, etc. So why would someone perform a 51% attack on the network to seize freezable assets? Not the issue here. ii) Is there a business risk for stablecoin issuers if the underlying chain’s security diminishes? Yes. Ok, so Circle and Tether may become net buyers of ETH to ensure the tokenized assets minted onchain are secure. The elephant in the room: centralization risk. If these entities become the largest holders of ETH then there’s a bigger threat around influence (political or otherwise). But let’s be honest… we all know that the truly decentralized future that Satoshi laid out is unrealistic. You’ve got governments and corporate entities stock piling BTC in reserve. Perhaps we will see Strategic ETH reserves set up in the US to protect the dollar as more USD is minted on chain? Ideally there’s some middle ground, but it’s looking more likely we are just bringing traditional systems onchain. iii) Circle / Tether could accumulate DeFi tokens to sway governance decisions on protocols. The illusion of decentralization. Regulators may end up having to step back in, ensuring disclosure around influence or control, just like traditional financial systems. So what’s the solution? - ETH market cap needs to grow via broader adoption, staking and price appreciation - Deeper network securit features so these centralized entities aren’t obliged to accumulate to manage their risk - Maybe Decentralized stablecoins need to gain traction? - Governance caps for giga whales when voting on protocol proposals Honestly, if the rate of stables minted onchain continues, then surely ETH price will appreciate one way or another. Unless other chains like TRON become the preferred home for stablecoins. World Liberty Financial (WLF) has been hedging its risk given it holds a decent stack of TRX and ETH.