✓ Verified by 4+ outlets ETH
Vitalik Buterin says ETH's value should rest on being a store of value, not on burning fees
Summary
Ethereum co-founder Vitalik Buterin argued in an X thread on Sunday, Nov. 8, that “ETH as store of value (SoV)” makes “much more sense to focus on” than “ETH as fee-burning token,” The Block and crypto.news reported.
His thread gives three reasons: the fee-burning case “never was as strong as it seemed,” optimizing for it would demand Ethereum work in ways hard to square with decentralization and capture resistance, and a store-of-value focus fits Ethereum’s strengths in decentralization and what he calls CROPS (censorship and capture resistance, open source, privacy and security).
Buterin said EIP-1559, the 2021 change that burns part of every transaction fee, “is fine and good, we should keep them,” but that holders “should not feel sad if fee burn is < 10% of breakeven indefinitely; the value of ETH comes from elsewhere,” according to his post and both outlets.
The Block reported he said much of the ETH burned in 2021 through 2023 came from crypto-internal activity whose revenue would fall alongside ETH’s price, and that optimizing for burn would require “highly interventionist governance” and, to some degree, higher gas prices that “may price out users.” The Block said daily burns have fallen sharply, from about 1.48 million ETH in 2022 to about 19,200 ETH so far this year by its data, and noted a proposal to burn a rising share of validator rewards was withdrawn last month after pushback; crypto.news reported Solana co-founder Anatoly Yakovenko agreed that “you can’t focus on fees as the product.”
Key facts
- Buterin on X (Nov. 8): “Expanding on why I believe ‘ETH as store of value (SoV)’ makes much more sense to focus on than ‘ETH as fee-burning token’. Three primary reasons: 1. ETH as fee-burning token never was as strong as it seemed 2. Optimizing for ETH as fee-burning token would demand Ethereum and ETH function in ways that are very hard to make compatible with decentralization and capture resistance. 3. Meanwhile, optimizing for ETH as SoV is aligned with Ethereum focusing on its unique strengths (decentralization and CROPS).”
- Buterin: “EIP-1559 (including its burn) is fine and good, we should keep them. But we should not feel sad if fee burn is < 10% of breakeven indefinitely; the value of ETH comes from elsewhere.”
- The Block: Buterin laid out a valuation model in which a token burning $1 billion a year at a 4% discount rate would have a $25 billion floor, then wrote, “But here's the problem: this was never a true floor,” because most 2021–2023 burns came from “crypto-internal use cases.” crypto.news reported the same $1 billion / 4% / $25 billion example.
- The Block: Buterin said a burn-optimizing Ethereum would need “highly interventionist governance, for the long term,” and that optimizing for fee burn means optimizing for higher gas prices to some degree, which “may price out users, including some users who may need privacy and security the most.”
- The Block, citing its own data: Ethereum burned about 1.48 million ETH in 2022 (roughly $3.6 billion) versus about 19,200 ETH (about $43 million) so far this year.
- The Block: A controversial proposal to burn a rising share of validator rewards as more ETH is staked was withdrawn last month after facing pushback.
- crypto.news: Buterin estimated, under a hypothetical corporate-style funding model, that Ethereum could need about 700,000 ETH a year for protocol research and development; he pointed to multisig wallets, private account abstraction and Fork-Choice Enforced Inclusion Lists (FOCIL) as technologies supporting his preferred direction.
- crypto.news: Solana co-founder Anatoly Yakovenko replied on X, “Vitalik is absolutely right that you can’t focus on fees as the product. That’s absolutely meaningless.”
- Decrypt: Buterin says ETH's value comes from stability, citing its decentralization, censorship resistance and security, rather than fee burns.
Related stories
- Indian exchange Unocoin keeps withdrawals frozen after spotting outgoing ether transfers from its BitGo wallets
- Binance sets aside $6.34 billion to cover record hack as TRM and Chainalysis tie it to North Korea's TraderTraitor
- Ethlabs shelves faster Ethereum blocks to push quantum-resistant accounts into 2027, two years ahead of the official roadmap