Ethereum co-founder Vitalik Buterin has called on $ETH holders to prioritize the cryptocurrency’s effectiveness as a store of value over the amount of ETH burned through transaction fees, marking a pivot in how the community evaluates the token’s long-term potential.
Buterin’s argument for store of value
In a series of posts on X, Buterin stated that Ethereum’s fundamental value is closely linked to its decentralization, rather than the mechanics of fee burning that were introduced by EIP-1559. This fee mechanism destroys a portion of ETH paid by users with each transaction, intending to make the asset scarcer over time.
Buterin said, “EIP-1559 is fine and good, we should keep them.” However, he also noted that the Ethereum community should not be disappointed if the percentage of fee burn remains below 10% of breakeven indefinitely. He argued that ETH’s value is derived from other aspects of the network and not solely from burning.
Buterin walked through valuation models, demonstrating that using annual fee burn and a discount rate to set a price floor for ETH, such as $1 billion burned at a 4% rate implying a $25 billion floor, has not actually held up in practice.
He explained that during the years 2021 to 2023, most ETH burning resulted from activity internal to the crypto ecosystem, including notable events like a digital collectible sale that burned $180 million in a single day. Buterin maintained that if ETH’s price were to drop significantly, so too would demand and, consequently, fee burn.
Debate within the Ethereum community
Questions over ETH’s primary function have fueled ongoing debates among developers and investors. Kevin Owocki, founder of the funding platform Gitcoin, described this as more of a political and economic dispute rather than a purely technical one, citing active disagreements about ETH’s purpose.
Owocki characterized the community as split between different philosophies, debating whether ETH should primarily serve as sound money or as a productive asset within decentralized finance and infrastructure networks.
Buterin countered the fee burn valuation thesis by highlighting that a price floor for ETH depends on revenue streams originating from outside the crypto sector. He suggested that the expansion of tokenized real-world assets on Ethereum could soon provide this external backing.
Mini dictionary: Gitcoin is a platform aiming to fund digital public goods, particularly open-source projects in the blockchain ecosystem, through grants and community-driven programs.
Security and Ethereum network upgrades
Buterin underscored the importance of robust security for a successful store of value asset. He referenced Ethereum’s conservative approach to protocol updates, the move towards protocol stability known as partial ossification, and the implementation of multisig wallets and privacy tools to enhance the safety of ETH holdings.
He cited EIP-8288, a draft proposal he co-authored, which supports secure and private ETH storage, and emphasized the goal of the FOCIL initiative to prevent block builders from censoring transactions. Buterin noted that he was able to synchronize a full node on his personal laptop in under six hours, with minimal storage requirements, demonstrating ongoing improvements in network efficiency.
The first test for a store of value, as Buterin puts it, is simply “to survive,” and Ethereum’s development choices continue to reflect that long-term perspective.
