Ethereum co-founder Vitalik Buterin has argued that ETH should prioritize its store-of-value (SoV) role over fee burning, questioning whether the destruction of transaction fees should serve as the anchor for the asset's valuation. In a recent explanation shared in a post on X (link), Buterin identified decentralization, privacy, and security as central to Ethereum's long-term value, while defending the EIP-1559 fee mechanism.

Debates over fee burning have been part of Ethereum's economic conversation since EIP-1559 went live with the London upgrade in 2021, introducing the mechanism that burns a portion of each transaction's base fee and removes it from circulation. The store-of-value question itself carries weight across the industry: in crypto, the SoV label is most closely associated with bitcoin, and whether ETH can also claim that role has shaped discussions about protocol priorities and monetary design.

Fee-Burning Valuation Model Under Scrutiny

Buterin said ETH's fee-burning model has never delivered the strong valuation floor some investors expected. The approach estimates an asset's value by dividing annual fees burned by a discount rate: for example, $1 billion in annual burns at a 4% discount rate implies a $25 billion valuation floor.

The problem, according to Buterin, is that this calculation assumes revenue comes from external demand. Ethereum's fee burns between 2021 and 2023 relied heavily on crypto-related activity, which can weaken during market declines. He pointed to the growing real-world asset economy as a potential source of external backing, while noting that mature financial activity should produce fewer extreme fee spikes.

Buterin maintained that Ethereum should retain EIP-1559 even if fee burns remain below 10% of breakeven.

Fee Maximization Could Threaten Decentralization

Buterin argued that maximizing fee revenue would require substantial spending and a more interventionist form of governance. Comparing Ethereum's approximately $270 billion market capitalization with L'Oreal's corporate valuation, he estimated that matching the company's research spending could require roughly 700,000 ETH annually.

Such funding, he said, could reduce validator revenue by two-thirds and introduce political challenges. Higher gas prices could also exclude users who need privacy and security, meaning that maximizing revenue per transaction could restrict overall access to the network.

Because burned fees permanently remove ETH from supply, the trade-off Buterin describes also bears on ETH's monetary properties, not just on network accessibility.

Security and Privacy Anchor the SoV Case

Buterin tied ETH's store-of-value role to Ethereum's decentralization and its CROPS principles: censorship resistance, open source, privacy, and security. He highlighted multisig development, Kohaku, private account abstraction, and workstreams related to EIP-8288.

He also cited FOCIL, which aims to prevent block builders from blocking transactions, and identified post-quantum security, post-AI resilience, and protocol stability as priorities. Broader real-world asset issuance, he added, could expand ETH's uses for collateral and conversion. Those initiatives give observers concrete reference points for tracking whether the security and privacy foundations behind the SoV case advance in practice, alongside the growth of real-world asset issuance.