Source published: November 9, 2026, at 09:54:49 UTC+8. This article summarizes Vitalik Buterin’s argument as presented in Odaily’s Chinese translation.
Ethereum’s valuation should place greater weight on ETH’s role as a store of value, rather than treating transaction-fee burns as its primary support, Vitalik Buterin argued in an X post that Odaily reported had appeared the previous evening.
His position was not to abandon EIP-1559 or its burn mechanism. Instead, he argued that burning fees has limits as a valuation framework—and that maximizing burns could undermine the decentralization, resistance to capture and accessibility that help make ETH worth holding.
Even if the amount of ETH burned remained below 10% of new issuance over the long term, he argued, that would not necessarily be a disappointment: ETH has other potential sources of value.
The burn-based valuation model—and its weak assumption
The article presents a simplified net-present-value formula:
Token market capitalization = annual value of fees burned ÷ discount rate.
For example, a token that consistently burns $1 billion a year would have an implied valuation of $25 billion at a 4% discount rate. In that example, investors regard $1 billion today as equivalent to $1.04 billion a year later.
Under this logic, $25 billion could act as a valuation floor. Below that level, an investor could buy tokens, sell some each year while maintaining the same share of total supply, and earn a return above the market benchmark.
But the durability of the fee stream is the critical assumption.
Ethereum burned substantial amounts of ETH between 2021 and 2023. According to Buterin’s argument, much of that demand came from activity within the crypto economy. If ETH’s price fell to one-tenth of its previous level, the revenue those activities generated could also fall as participants had less money to spend.
That weakness applied both to NFT buying frenzies—which at one point burned roughly $180 million in fees in a single day—and to more routine lending activity. A valuation floor would be more credible if the underlying demand came from outside crypto markets.
Growth in real-world assets, or RWA, could give Ethereum more external demand support. However, mature, stable businesses would be unlikely to reproduce the enormous daily fee spending associated with speculative booms.
What maximizing fee burns could cost
Buterin also questioned the organizational demands of using fee burns to justify ETH’s approximately $270 billion market capitalization cited in the source.
In that scenario, Ethereum would need to operate at the scale of a major global company, roughly comparable to L’Oréal. Sustaining that position would require both substantial investment and active strategic decisions.
The article cites an AI-generated estimate that L’Oréal’s annual research and development spending was about 0.58% of its market capitalization. Applying the same ratio to Ethereum, Buterin argued, would quickly exhaust the Ethereum Foundation’s funds. The hypothetical alternative could require approximately 700,000 ETH a year in protocol-funded support, reducing validator income by around two-thirds.
These are scenario estimates, not an announced funding plan, and they cover only research and development—not the full cost of maintaining competitiveness.
The governance implications matter as well. A business seeking durable fee income must choose markets, develop products and respond to changing technology and user needs. Following that model could require Ethereum to maintain a highly interventionist form of governance.
Large recurring allocations and stronger governance would introduce political pressures, rather than necessarily improving decentralization or resistance to capture.
There is also a user-access trade-off. Pursuing higher burns can mean pursuing higher gas prices, potentially excluding users who particularly need privacy and security. Maximizing price multiplied by usage is not the same objective as enabling as many people as possible to use the network within safe resource limits.
A store-of-value framework puts survival first
In Buterin’s alternative framework, the central question is whether Ethereum can survive over the long term.
He said the qualities people most often identified as valuable were decentralization and CROPS: censorship resistance, resistance to capture, open source, privacy and security. These qualities also have institutional relevance: privacy can support risk management and data-protection compliance, while security and the ability to run a node address practical operational needs.
Different holding motives imply different priorities. An investor seeking exposure to a network that continually captures fees from emerging financial trends might favor strong leadership and frequent adaptation. Someone holding ETH primarily to store value would place more weight on the network’s long-term resilience.
That approach, he argued, calls for:
- Cautious security decisions and serious preparation for changes brought by quantum computing and AI.
- A progressively more stable core protocol once it is complete, with more innovation occurring in upper layers.
- High thresholds for new protocol complexity and reward mechanisms vulnerable to capture by interest groups.
- Safe, private asset custody and confidence that block builders cannot prevent users’ transactions.
- Less dependence on infrastructure providers.
He identified multisignature wallets, privacy tools, privacy-focused account abstraction and FOCIL as work supporting those goals. As an example of reduced infrastructure dependence, he said he could run a node on his laptop, synchronize it in under six hours and use roughly one-eighth of its disk space—better performance than in 2019.
Application growth can support the same thesis
The store-of-value argument does not exclude application growth. Buterin argued that more RWA and decentralized assets issued natively on Ethereum’s L1 would expand what ETH holders could do, including exchanging assets securely without relying on trust and using ETH as collateral.
Those uses could increase the practical utility of holding ETH. Trade-offs remain: shorter block intervals, for example, could create centralization pressure. Nevertheless, he saw less conflict between these uses and decentralization than between decentralization and maximizing fees.
The distinction is between a measurable mechanism and a broader valuation thesis. Fee burns reduce supply, but the simplified burn model depends on sustained demand and a chosen discount rate. The store-of-value case instead rests on the durability and usefulness of Ethereum’s security, privacy and decentralization. Neither argument in the source establishes a standalone fair-value target for ETH.
Original article: Odaily. Original author: Vitalik Buterin; Chinese compilation and translation: Odaily, translated by Asher.