Ethereum co-founder Vitalik Buterin says ETH’s value should rest on its role as a long-term store of value—not on the idea that burning transaction fees will steadily make the token scarcer and thus more valuable. In a post on X, Buterin argued that Ethereum should prioritize decentralization, security and resistance to outside control rather than optimizing the protocol to maximize fee burns. While he supports keeping EIP-1559 (which burns the base fee), he warned that basing ETH’s valuation on predictable fee revenue is economically fragile. Why fee-burning as a valuation model is weak, according to Buterin - Fee revenue is volatile and often driven by speculative crypto activity (NFT booms, DeFi congestion). If ETH price falls, the spending that produces fees is likely to fall too. - Simple “income stream” style valuations (e.g., $1 billion of annual burns at a 4% discount implying a $25 billion valuation) assume burns remain stable even if the asset collapses—an unrealistic premise. - Designing Ethereum to chase fee revenue would effectively turn the protocol into a revenue-focused company, requiring massive, sustained spending and governance intervention that could undermine decentralization and openness. He illustrated the corporate-style risk with a rough estimate: if Ethereum became a revenue-driven chain it might need on the order of ~700,000 ETH per year for protocol research and development—raising tricky questions about who controls that money and how validator rewards would be affected. Context: ETH supply dynamics and layer-2s Buterin’s remarks come as ETH trades near $2,240 and the network has experienced stretches of net issuance (more ETH issued to validators than burned) during lower activity periods. The March 2024 Dencun upgrade reduced layer-2 transaction costs, shifting activity off mainnet and into cheaper rollups—this reduced mainnet fee burns and contributed to periodic net inflation. He also acknowledged that tokenized real-world assets now add revenue connected to traditional markets, but said mature financial products are unlikely to reproduce the extreme fee tails seen in NFT speculation. Alternatives and long-term priorities Buterin said Ethereum’s durable value for holders should come from being a dependable, censorship- and capture-resistant platform that survives political and technological stresses. He summarized these strengths as CROPS: censorship and capture resistance, open-source development, privacy and security. To back this up, he pointed to ongoing work such as Kohaku wallet privacy tools, multisignature wallets, private account abstraction, and a proposed Fork-Choice Enforced Inclusion Lists (FOCIL) mechanism to make it harder for block builders to exclude eligible transactions. Potential harms of optimizing for fees Buterin warned that optimizing for fees could push gas prices higher and make Ethereum less accessible for users seeking privacy and secure financial transactions. It could also centralize decision-making and encourage interventionist governance, which conflicts with the design goals of a public, permissionless blockchain. Broader reaction Solana co-founder Anatoly Yakovenko publicly agreed, writing that “you can’t focus on fees as the product” and that chains should pick a product that brings value to people and do it well. Bottom line Buterin’s recommendation is not to abolish fee burning—he explicitly said “EIP-1559 (including its burn) is fine and good, we should keep them.” Rather, he urges the community to stop treating fee-burning as the primary investment narrative and instead emphasize Ethereum’s resilience, censorship resistance, and long-term survivability as the foundations for ETH’s store-of-value case—especially as new risks (like AI-driven threats) and changing usage patterns reshape the ecosystem. Read more AI-generated news on: https://app.chaingpt.org/news