Vitalik Buterin warned at Devconnect in Buenos Aires that large institutional investors like BlackRock could threaten Ethereum’s decentralization. Concentrated holdings may push the network toward technical choices favoring institutions over the global community. The panel explained how institutional accumulation could undermine Ethereum’s core principles of permissionless access and censorship resistance.
Institutional Pressure Could Alienate Core Builders
Vitalik Buterin and computer scientist Roger Dingledine discussed the consequences of Wall Street’s growing presence in Ethereum. Nine firms offering Ethereum ETFs now hold more than $18 billion in ETH, while corporate treasuries add another $18 billion. These investors could soon control over 10% of Ethereum’s total supply.
Buterin explained that this creates a risk of alienating developers who prioritize permissionless systems. He emphasized that builders may leave if Ethereum becomes a tool for institutional finance. The departure of these contributors could reduce both technical expertise and ideological commitment, weakening Ethereum’s decentralized foundation.
This tension is increased as institutions push for systems that meet performance and regulatory needs. Buterin noted that Ethereum’s original design values transparency, global access, and censorship resistance, which contrast sharply with institutional priorities.
Technical Decisions May Favor Institutions, Not Users
The second risk identified by Buterin is base-layer technical choices shaped by institutional demand. He cited a hypothetical example: 150-millisecond block times. While faster blocks benefit high-frequency trading, they make node operation nearly impossible for typical users outside financial hubs like New York City.
Such decisions could centralize Ethereum geographically and network-wise. Privacy-focused users and small node operators could get pushed out, leaving the network controlled mostly by big players with lots of resources. Buterin warned that when Ethereum is made mainly for institutions, it loses its openness and the values it was built on.
The conversation pointed out a key trade-off: gaining approval from institutions versus keeping Ethereum open for anyone to use without permission. Buterin’s warning highlights a growing risk: if too much ETH ends up in the hands of a few, Ethereum could start moving in a direction that doesn’t match what the community wants.
Quantum Threats and Privacy Challenges
Beyond governance, Buterin flagged emerging technological threats at the Devconnect. Quantum computing poses a potential risk to Ethereum’s cryptography by 2028, requiring a coordinated upgrade across the network to maintain security.
Elliptic curve cryptography currently secures transactions, wallets, and signatures, but quantum advances could break these protections. Similarly, Ethereum is addressing privacy gaps through its new Kohaku framework, which enters public testing.
Buterin noted the ecosystem is in a “last mile stage,” requiring unified technical efforts to support user confidentiality. Both quantum security and privacy improvements tie into governance issues, because big institutions often care more about speed and compliance than keeping the network open and resistant to censorship.
Buterin also compared Ethereum’s decentralized design to FTX’s centralized setup. He explained that FTX failed because too much power was in the hands of a few insiders, which left users exposed to hidden risks.
Buterin emphasized that Ethereum’s open governance prevents similar failures, saying the network’s “can’t be evil” design. He warned that preserving transparency and distributed decision-making remains essential as institutional influence grows.
Conclusion on Institutional Influence
Ethereum’s growing institutional ownership presents structural risks that could change its technical direction. Vitalik Buterin warned that concentrated holdings might drive builders away and promote decisions favoring large financial actors. He emphasized that preserving Ethereum’s global, permissionless, and censorship-resistant nature requires a committed core community focused on long-term decentralized values.