TheBlock
Ethereum co-founder Vitalik Buterin says ether (ETH) should be valued primarily as a store of value, arguing the case for treating it as a fee-burning token was weaker than it appeared during the last market cycle. In an X thread on Sunday, Buterin said EIP-1559's fee burn is "fine and good" and should stay, but the network should not "feel sad" if the burn stays under 10% of breakeven indefinitely, because "the value of ETH comes from elsewhere."
The data backs his skepticism. Ethereum burned about 1.48 million ETH in 2022, worth roughly $3.6 billion, against about 19,200 ETH, or $43 million, so far this year. Buterin also dismantled the valuation model behind burn tokens, in which market cap equals annual burn divided by a discount rate, noting most 2021-2023 burns came from crypto-internal use cases like the Otherside land sale that burned $180 million in fees in a single day. "The floor argument only works if the backing of the revenue stream is external," he wrote, adding that tokenized real-world assets now give Ethereum a better claim to that external backing.
Why it matters
Buterin framed what users actually value as CROPS: censorship and capture resistance, open source, privacy and security. For a store-of-value holder, he said, "the first and most important SoV-ish metric" is survival, tied to work on post-quantum security, privacy projects like Kohaku, and the FOCIL censorship-resistance proposal. He argued optimizing for burn would require higher gas prices that price out users and interventionist governance incompatible with decentralization, and cited an estimate that matching a company like L'Oreal's R&D spend on Ethereum's $273 billion market cap would need about 700,000 ETH a year, cutting validator revenue by two-thirds.
Market impact
ETH traded at $2,236, down 0.3% on the day, but the narrative case strengthened: Solana co-founder Anatoly Yakovenko agreed "you can't focus on fees as the product," while Moonrock Capital's Simon Dedic called ETH as a store of value "the biggest bull case for Ethereum" and the easiest story to sell to institutional capital.
Frequently asked questions
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Why does Vitalik Buterin say ETH should be valued as a store of value?
In a Sunday X thread, Buterin argued the fee-burn valuation model never had a true floor because most 2021-2023 burns came from crypto-internal use cases. He says the value of ETH comes from Ethereum's decentralization, censorship resistance, privacy and security, not from fee burn.
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How much ETH has Ethereum burned since EIP-1559?
Ethereum burned about 1.48 million ETH in 2022, worth roughly $3.6 billion. By contrast, it has burned about 19,200 ETH, or $43 million, so far this year, a sharp decline in daily burn activity.
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Does Buterin want to remove the EIP-1559 fee burn?
No. He called EIP-1559 "fine and good" and said the network should keep the mechanism and its burn, even if the burn only partially offsets new ETH issuance indefinitely. His point is that fee burn should not be the basis for valuing ETH.
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What is the CROPS framework Buterin used for Ethereum?
CROPS stands for censorship and capture resistance, open source, privacy and security. Buterin said these are the qualities people cite most when asked what they value about Ethereum, and for a store-of-value holder the most important metric is survival.
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How did the crypto industry react to Buterin's store-of-value thesis?
Solana co-founder Anatoly Yakovenko agreed that fees cannot be the product, while Moonrock Capital founder Simon Dedic called ETH as a store of value the biggest bull case for Ethereum and the easiest story to sell to institutional capital.
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