TLDR:
Vitalik Buterin says ETH’s store-of-value case rests on decentralization, security, and long-term stability.
Buterin backs retaining EIP-1559 even if ETH fee burns remain under 10% of the break-even level indefinitely.
He says 2021–2023 fee burns were driven largely by crypto speculation, making them a weak ETH valuation floor.
Buterin warns a fee-focused model could demand 700,000 ETH yearly for R&D and interventionist governance.
Ethereum co-founder Vitalik Buterin has argued that ETH should be valued primarily as a store of value rather than through the amount of transaction fees the network destroys. In a November 8 series of posts on X, Buterin outlined three reasons for shifting the focus.
He questioned whether fee burns reliably support ETH’s valuation, warned that maximizing fee revenue could undermine decentralization, and said Ethereum’s security offers a stronger foundation for long-term holders.
However, Buterin stressed that Ethereum should retain EIP-1559, which burns the base fee paid on transactions. He added that holders should not be concerned even if burns remain below 10% of the break-even level indefinitely.
Buterin Questions Whether Ethereum Fee Burns Support ETH Value
Buterin challenged the assumption that annual fee burns establish a dependable valuation floor. Under a simplified discounted-cash-flow approach, burned fees can represent economic value accruing to holders, but that calculation depends on sustainable demand.
He argued that exceptionally high burns during 2021–2023 largely came from activity within crypto, including speculative trading and digital collectibles. If ETH lost 90% of its value, he reasoned, much of the spending power behind those fees could decline alongside it.
Consequently, the apparent valuation floor would weaken during market downturns, precisely when investors would want protection. Although tokenized real-world assets could generate demand from outside crypto, Buterin said mature businesses were unlikely to recreate speculative peaks that once produced roughly $180 million in burns in a single day.
Higher Ethereum Fees Could Threaten Decentralization
Buterin also examined what optimizing Ethereum for fee-based valuation would require. Supporting a hypothetical market capitalization of roughly $270 billion through such a model, he argued, could push Ethereum toward the operating structure of a large corporation.
He estimated that a revenue-driven strategy might require approximately 700,000 ETH annually in protocol-funded research and development. Maintaining that system could also require more interventionist governance over spending and development priorities, creating tensions with Ethereum’s decentralization and resistance to capture.
Higher gas fees would make Ethereum more expensive to use. Buterin warned that this could exclude people who most need private, secure, and censorship-resistant transactions. Ethereum’s EIP-1559 specification confirms that the network burns transaction base fees, while validators receive priority fees. The mechanism reduces circulating supply but does not guarantee that ETH becomes deflationary.
ETH Store-of-Value Case Centers on Security and CROPS
Instead, Buterin connected ETH’s store-of-value potential to Ethereum’s CROPS principles: censorship and capture resistance, open-source development, privacy, and security. The Ethereum Foundation formally established censorship resistance, open source, privacy, and security as central priorities in its March 2026 mandate.
For holders, Buterin said the priority is preserving assets reliably over time. That requires conservative security decisions, greater stability in the core protocol, reduced political intervention, and secure private transfers with limited dependence on intermediaries.
He added that holding ETH becomes more useful when assets remain directly on Ethereum’s base layer and can be exchanged without trusted middlemen or used as collateral.
Buterin also connected the argument to potential disruption from artificial intelligence. As technologies and institutions change, he suggested, dependable decentralized infrastructure could become increasingly valuable to people seeking long-term asset protection.
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