Ethereum co-creator Vitalik Buterin stated his perspective that Ethereum (ETH) ought to function fundamentally as a store of value, maintaining that justifying its valuation through a fee-burning model is much weaker than it seemed during the previous market cycle.
During a Sunday morning X thread, Buterin remarked that prioritizing “ETH as store of value” makes “much more sense to focus on” over “ETH as fee-burning token.” He noted that EIP-1559, the 2021 upgrade responsible for destroying a segment of every transaction fee, “is fine and good,” and asserted that the platform should maintain the functionality and its burn, even if the destroyed tokens merely cover a portion of newly minted ETH. “But we should not feel sad if fee burn is < 10% of breakeven indefinitely; the value of ETH comes from elsewhere,” he stated.
Buterin contended instead that the primary qualities users appreciate about Ethereum center on its decentralization alongside its pursuit of privacy, security, and censorship resistance, noting that the network’s main practical advantage for the financial landscape is reliability. “In the era of AI disruption, stability will be highly valued,” he wrote.
The burn ‘floor’
The fee-burning mechanism served as the foundation for the “ultrasound money” hypothesis that gained popularity among ether holders throughout the 2021 bull run. Within his thread, Buterin outlined the valuation framework tied to fee-burning assets, wherein a token’s total market capitalization equals the yearly burn divided by a discount rate. Following that framework, an asset destroying $1 billion annually at a 4% discount rate would establish a natural valuation baseline of $25 billion, he wrote.
“But here’s the problem: this was never a true floor,” Buterin pointed out. He mentioned that the majority of ether destroyed between 2021 and 2023 originated from “crypto-internal use cases” whose revenue would have declined alongside ether’s market value, pointing to an instance where the network “randomly [went] crazy” over a “digital monkey sale” that destroyed $180 million in fees during a single day. “The floor argument only works if the backing of the revenue stream is external,” he stated.
(As a matter of fact, the sale referenced by Buterin involved virtual land situated in the Otherside metaverse from Yuga Labs, the developers behind the Bored Ape Yacht Club NFT project. That event featured participants spending as much as $10,000 in transaction fees to acquire Otherdeed NFTs currently valued at roughly $150.)
Buterin observed that Ethereum currently holds a “better claim to this external backing” owing to the expansion of tokenized real-world asset markets. However, as a “normal stable mature business,” such activity is unlikely to trigger identical fee spikes, he added.
The quantity of ether incinerated on a daily basis has dropped dramatically since that period, based on The Block’s data. Ethereum destroyed approximately 1.48 million ETH throughout 2022, representing roughly $3.6 billion, contrastingly with about 19,200 ETH, or $43 million, so far this year.
The corporate comparison
Buterin noted that validating ether’s market cap, which he estimated around $270 billion, purely through fee destruction would place Ethereum on par with an enterprise like L’Oreal. Ether’s total market value sat at $273.3 billion Sunday morning, according to The Block’s ETH price tracker.
Enterprises of that scale allocate immense sums to sustain their standing, Buterin wrote. Relying on an AI projection estimating that L’Oreal dedicates roughly 0.58% of its market capitalization toward research and development annually, he explained that matching that proportion would “bankrupt the [Ethereum Foundation] almost immediately,” meaning it would instead demand in-protocol funding totaling roughly 700,000 ETH each year, reducing validator earnings by two-thirds.
What Buterin omitted mentioning: the scale of funding secured by the Ethereum Foundation (EF) already sparks debate within the crypto sphere.
Routine criticism from token holders has targeted the EF’s ether liquidations, notably after it offloaded 20,000 ETH valued at approximately $47 million to Bitmine across a two-week span in April and May. Buterin stated during May that he frequently hears from community members who believe the foundation’s actions diverge from its stated commitments.
The EF commenced staking a portion of its treasury earlier in the year to yield returns, and during March released a mandate defining itself as “one of many stewards” for the network. Amid departures among senior leadership in May, Buterin shared that the organization would transition into “a smaller ship” that liquidates less ether while centering on tasks that “would not happen otherwise.”
Additionally, Buterin pointed out that an Ethereum optimized for token destruction would demand “highly interventionist governance, for the long term,” and that neither condition aligns with his objectives for the network regarding capture resistance and decentralization. Buterin further explained that prioritizing fee destruction ultimately means favoring elevated gas prices to an extent, which “may price out users, including some users who may need privacy and security the most.”
Survival as a metric
Buterin expressed that whenever he inquires about what individuals appreciate most concerning Ethereum, they frequently point to decentralization alongside what he identifies as CROPS (censorship and capture resistance, open source, privacy and security). For any investor holding ether as a store of value (SoV), “the first and most important SoV-ish metric” is simply “to survive,” he wrote.
He connected that goal to concepts originating from recent developer gatherings, spanning post-quantum security, partial ossification at the base layer, and strict criteria for introducing fresh precompiles or in-protocol rewards. Buterin highlighted developments regarding multisig wallets, the Kohaku privacy initiative, the FOCIL censorship-resistance framework, and lightweight nodes as instances, mentioning that he operates a node on his personal laptop which finished syncing under six hours while consuming “only 1/8 of my hard drive.”
Buterin observed that expansion among natively issued assets on Ethereum’s base layer, encompassing real-world assets, proves “highly synergistic” with the store-of-value thesis because it broadens utility options for ether holders, such as deploying it as collateral.
Buterin regards Ethereum as “really not just a blockchain anymore,” but rather “a hybrid architecture that combines together blockchains and modern cryptography.” Back in September, he outlined Ethereum’s roadmap through 2030 and noted that the upcoming Hegota upgrade will likely represent the network’s final “normal” fork.
Industry reactions
Buterin’s statements drew backing from prominent crypto figures. Solana co-creator Anatoly Yakovenko noted that Buterin “is absolutely right that you can’t focus on fees as the product.” Attorney Gabriel Shapiro representing MetaLeX described the thread as “a ‘nature is healing’ moment,” while Moonrock Capital chief Simon Dedic contended that ether acting as a store of value would represent “the biggest bull case for Ethereum. And at the same time the easiest story to sell to institutional capital.”
The discussion arrives roughly five weeks after the co-designers behind the contested proposal EIP-8363 rescinded it from consideration regarding the network’s upcoming Hegota upgrade, arriving subsequent to the delayed Glamsterdam hard fork. The draft, which would have incinerated a growing proportion of validator incentives as larger amounts of ether undergo staking, addressed dangers posed by elevated staking ratios against “ETH’s role as money” while provoking pushback from SharpLink CEO Joseph Chalom alongside Aave creator Stani Kulechov. Its creators intend to coordinate a distinct issuance procedure stretching through EthCC during April.
Ether exchanged hands at $2,236 by 9:23 a.m. ET, marking a 0.3% decline across the session, according to The Block’s pricing metrics.
Originally published at https://www.theblock.co/news/ecosystems/2026-11-08-vitalik-buterin-says-eth-should-be-valued-as-a-store-of-value-not-a-fee-burning-token-436022.
