Ethereum co-founder Vitalik Buterin has argued that ether (ETH) should be primarily viewed as a store of value rather than a fee-burning token. In a thread on X, Buterin stated that while EIP-1559's fee-burning mechanism is beneficial, its impact on ETH's valuation has been overstated. He emphasized that Ethereum's true value lies in its decentralization, censorship resistance, privacy, and security, which contribute to the network's stability, a trait he believes will be highly valued in the era of AI disruption.
Buterin criticized the 'ultrasound money' thesis, which suggested that ETH's market cap had a natural floor based on fee burn. He pointed out that most of the ETH burned between 2021 and 2023 came from crypto-internal use cases, such as the Otherside metaverse sale, which burned $180 million in fees in a single day. He argued that fee burn alone cannot sustain Ethereum's $270 billion market cap, comparing it to a company like L'Oreal, which spends heavily to maintain its position.
The Ethereum Foundation's funding and governance practices also came under scrutiny. Buterin noted that matching L'Oreal's research and development spending would require significant in-protocol funding, cutting validator revenue by two-thirds. He emphasized that optimizing for fee burn would require interventionist governance, which conflicts with Ethereum's goals of capture resistance and decentralization. Buterin also highlighted the importance of Ethereum's survival as a metric for investors holding ETH as a store of value, citing ongoing work on privacy, censorship resistance, and lightweight nodes.
Industry reactions to Buterin's post were largely supportive. Solana co-founder Anatoly Yakovenko agreed that focusing on fees as the product is misguided, while Moonrock Capital founder Simon Dedic argued that ETH as a store of value presents the biggest bull case for Ethereum. The thread follows the withdrawal of the controversial EIP-8363 proposal, which aimed to burn a rising share of validator rewards.