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Given that Ethereum naturally allows for the creation of arbitrary tokens that can either have value themselves or track a real-world asset, can Ethereum be secured by PoW/PoS when the total assets on chain exceed the market cap of the Ether token?

Does this security guarantee breakdown after the assets exceed 2x, 10x, 100x the market cap of the Ether token... or never?

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The key question isn't how many assets are tracked on the Ethereum blockchain. The key question is "what does an attacker have to gain by an attack?"

In theory, the addition of more valuable assets to the chain will increase the demand for ether and raise its market valuation. Hopefully the owners of these assets will also purchase and hold some ether in order to impose costs on any potential attacker. But it's not a strict relation. Any time you have:

  1. A network which costs X value to conduct an attack against
  2. An attacker who has Y > X value to gain by an attack
  3. The same attacker has access to sufficient capital Z to pay the costs of borrowing X until Y is realised

Then you have a vulnerable network. Making X higher helps. Making laws and creating social outrage against attacks helps keep Z under-available, which helps. But in the end, Y is the real danger, because a big enough Y tends to create its own Z. The total value of assets on top of the network is only a problem to the extent that it contributes to Y. I hope that answers your question.

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