On 8 November, Ethereum co-founder Vitalik Buterin took to X to reiterate his view that Ether (ETH) should be seen as a store-of-value (SoV) asset, adding that ETH’s token burn was never as strong a value driver as many previously believed.
The Ethereum community has been arguing over the use case of ETH for years and, given Ethereum’s position as the largest smart contract platform used by major institutions, the debate has wide ramifications. Ethereum secures over $40 billion in DeFi TVL, $135 billion in stablecoins and over $12 billion in real world assets (RWAs) — a combined figure comparable in magnitude to the annual GDP of countries such as Qatar and Morocco.
This is not the first time that Buterin has sought to re-orient the view of ETH and promote it as a sovereign asset that has value beyond its applications. In May this year he introduced the concept of CROPS (censorship/capture resistance, openness, privacy, and security), which he says is aligned with his view of optimising for ETH as a store of value. His latest thread moves that argument forward.
The burn was never a floor
In 2021, Ethereum developers implemented EIP-1559, which burns a portion of every transaction fee, permanently removing it from circulation. The core idea was that the burn would ensure that ETH remained the primary asset used for chain security, while others saw the opportunity for the asset to become deflationary during episodes of high network activity.
Buterin’s thread offers a rule of thumb for what the burn is worth: a token that burns $1 billion in fees a year can support a valuation of about $25 billion, or 25 times its annual burn. In 2022 the burn destroyed 1.48 million ETH worth roughly $3.6 billion, enough to support about $90 billion of ETH’s value.
So far in 2026 it has destroyed about 19,200 ETH worth $43 million, which supports little more than $1 billion. ETH’s market capitalisation is $236 billion (at the time of writing), so the burn accounts for less than half a percent of it.
If Ethereum were to justify its $236 billion market capitalisation on the fee burn alone, it would need to function like a profit-seeking company. “Ethereum would essentially be functioning as a world-scale major corporation — it would be somewhere around L’Oreal,” Buterin wrote. In his view, going in this direction would seriously impair the network’s primary value propositions outlined in the CROPS vision.
Survival as the new measure
Given the market cap of ETH is far beyond what could be justified by the burn, Buterin makes the case that the market is already valuing ETH as SoV backed by a decentralised, censorship-resistant network. To back up this thesis, he points out that ETH is durable over time, can be self-custodied, spent privately and without censorship — all consistent with the properties of a SoV.
Furthermore, Ethereum’s roadmap enhances the stability and durability of ETH. Buterin listed the work under way: post-quantum cryptography, formal verification and FOCIL, a censorship-resistance change that headlines the upcoming Hegotá upgrade. The stability he refers to is that of the protocol, though most investors hear “SoV” and think of price.
Buterin added that snowballing growth in RWAs helps. “The more assets there are natively issued on L1, including both RWAs and native decentralized assets, the larger a set of things you can ‘do’ with your ETH,” he wrote. “Being able to easily (including safely, trustlessly) convert back and forth between ETH and other assets [and] use ETH as collateral … all forms part of the utility of holding ETH.”
The Bitcoiner objection
This presses on a deeper point of contention among crypto builders, namely, whether or not adding smart contracts helps or hinders an asset’s SoV thesis. Detractors point out that stores of value like gold or Bitcoin are difficult to alter, which is a key feature that makes them sound SoVs. Bitcoiner Dan Held put it bluntly: “Wild that you think a protocol with a constantly changing monetary policy (just like fiat) can be ‘sound money’.”
In fact, just this year, Ethereum developers engaged in a debate around a proposal that would have burned a rising share of staking rewards, reaching 100% once about half of all ETH was staked. EIP-8363 came from Justin Drake, the researcher who coined “ultrasound money”, and was withdrawn on 1 October. Opposition came from SharpLink, the second-largest listed ETH treasury firm, and from Aave’s founder Stani Kulechov, with SharpLink’s chief executive arguing that staking yield is the base rate for onchain markets. The influence business interests have on Ethereum’s monetary policy is a concern for proponents of ETH’s SoV thesis.
Bitcoin’s own test
Buterin has traded a claim that could be measured, and failed the measurement, for one that can only be proved over time. The burn could be checked block by block on ultrasound.money but survival is checked over decades.
On that test Bitcoin has the longer record — nearly 18 years against Ethereum’s 11 — although it faces its own long-term challenges. Transaction fees currently account for less than 1% of miner revenue, raising questions about how the network will fund its security as block subsidies decline. Bitcoin also faces the challenge of preparing for quantum computing, while disagreements over protocol changes continue to test its governance model.
The next checkpoint is 2028. That year’s halving, due around April, will cut Bitcoin’s issuance to about 0.4% a year. ETH’s supply is currently growing at between 0.8% and 0.9% with fluctuations possible via burn rates and any change in Ethereum’s issuance policy.
Buterin’s thread was welcomed by Ethereum builders and investors who believed that the burn was a poor way of establishing the value of ETH. The stablecoins, RWAs and DeFi deposits on Ethereum show that the network is used and has significant potential but whether ETH itself benefits from this is a separate question.
The answer can only be given by people choosing to keep savings in it through the bad years. ETH is moving beyond the burn thesis, whether it successfully establishes itself as a SoV may take decades to play out.
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