Vitalik Buterin says ETH should be valued as a store of value, not a fee-burning token

Judgment

Buterin’s guidance shifts the burden onto Ethereum stakers and protocol designers: they must stop treating fee burn as a valuation floor and instead defend ETH’s value through decentralization, censorship resistance and privacy, even if burn stays below 10% of breakeven indefinitely.

Basis

In an X thread, Vitalik Buterin said ETH as a store of value makes much more sense to focus on than ETH as a fee-burning token, while EIP-1559 is fine and good and the burn should remain. He argued that optimizing for fee burn would require large protocol spending and interventionist governance, conflicting with decentralization, censorship resistance, privacy and security, and could price out users via higher gas. He cited the fee-burn valuation model: $1 billion annual burn at 4% gives a $25 billion floor, but said it was never a true floor because 2021 through 2023 burns came largely from crypto-internal use. He said not to feel sad if fee burn is < 10% of breakeven indefinitely. He put ETH’s market cap at about $270 billion; The Block’s ETH price page showed $273.3 billion on Sunday morning. He said matching L’Oreal R&D spending of about 0.58% of market cap would require about 700,000 ETH a year in-protocol funding and cut validator revenue by two-thirds. The Block’s data showed Ethereum burned about 1.48 million ETH in 2022, worth roughly $3.6 billion, versus about 19,200 ETH, or $43 million, so far this year.