Ethereum co-founder Vitalik Buterin has called on the community to reconsider the network's development strategy. His key thesis: the ecosystem needs to promote ETH as a tool for capital preservation rather than relying on emission reduction and the fee-burning mechanism. According to the project's creator, the effect of coin destruction "was never as strong" as commonly believed.
In a series of posts, Buterin emphasized that the fee-burning mechanism introduced with EIP-1559 should be preserved. However, he cautioned against inflated expectations: "There's no need to be upset if fee burning remains below 10% of breakeven for years — the value of ETH is not created by this."
Why the effect of fee burning is limited
Buterin explained his position through a simple valuation model: a token's market capitalization equals the volume of burned fees divided by the discount rate. To justify a capitalization of roughly $270 billion solely through fee burning, Ethereum would have to operate as a global corporation on the scale of L'Oréal. For this, the network would need to allocate about 700,000 ETH per year to research and development of the protocol. As a result, validator income would drop by two-thirds.
In addition, according to Buterin, Ethereum would require "heavy-handed manual management" by developers. The pursuit of higher fee-burning levels would force gas prices up, which could drive away users who value privacy and security.
Stability as Ethereum's main advantage
Ultimately, Buterin called for focusing on decentralization and the CROPS principles — resistance to censorship and protection against power capture, open source, privacy, and security. These properties guarantee the predictability of the system's operation, unlike fee burning. "In an era of total change under the influence of AI, stability will be especially valued," the network's founder noted.
He named the ability to remain viable as the key criterion for a defensive tool. This task is directly intertwined with the plan to implement protection against quantum threats and the course toward freezing base mechanisms (ossification). In addition, the issuance of third-party digital assets within the main network increases the practical utility of ETH.
Such statements effectively signal a departure from the popular "ultrasound money" thesis, which relied on reducing the supply of ETH. The discussion unfolded during preparations for the Glamsterdam hard fork, with engineers warning of risks to previously created smart contracts. Buterin previously stated that the next update after it, Hegota, will be the last conventional blockchain upgrade.
Cryptalist analysis: Buterin's statements signal a fundamental shift in the Ethereum narrative — from the deflationary "ultrasound money" model to value through stability, security, and decentralization. For institutional investors, this means that ETH's valuation will increasingly depend on the network's utility and resilience rather than on fee-burning dynamics. The market will have to reassess the value drivers of the second-largest asset by capitalization, which could increase volatility during the run-up to Glamsterdam and Hegota.