Vitalik wants ETH to become "digital gold," but Ethereum continues to be upgraded: pursuing innovation on one hand, while asking the market to believe it will never change?

Author: Rejamong, Four Pillars

Translated by: TechFlow

TechFlow Summary: Vitalik recently explicitly defined ETH as a "Store of Value (SoV)" asset, attempting to break free from the valuation trap previously reliant on fee burning. However, Ethereum has traditionally been viewed as a high-frequency iterative tech stock, while the core premise of value store assets is extreme certainty and immutability, creating a natural paradigm conflict between the two.

This article deeply analyzes three core deadlocks ETH faces after shifting to the SoV narrative: permanent inflationary pressure after losing the burn mechanism, an unresolved monetary policy that could be altered at any time, and the ultimate paradox where technology must continuously iterate while the asset must remain stable. Without hard commitments, relying solely on optimistic assumptions falls far short.

On November 8, Ethereum co-founder Vitalik Buterin published a long thread on social media, explicitly advocating that ETH should be viewed as a "Store of Value (SoV)" asset, rather than what is known as a "fee-burn token" supported by burns.

The debate over ETH's asset attributes has long ceased to be news in the crypto industry. However, most past discussions have either remained at the level of marketing positioning for PR purposes or been confined to abstract philosophical speculation.

Vitalik's article clearly goes further. It is not only about the token itself, but also sets a new tone for restructuring the underlying DNA of the Ethereum network and its future evolutionary direction.

For a long time, Ethereum has been viewed by the industry as a foundational computing platform for smart contracts, and capital markets have habitually priced it according to the valuation logic of high-growth tech stocks.

Ethereum has consistently stood at the forefront of blockchain technology, leading innovation. Yet, tech stocks must constantly innovate and iterate quickly to survive; whereas the foundation of value store assets lies precisely in maintaining constancy and immutability as much as possible.

Now, Vitalik himself has anchored ETH as a value store asset, attempting to end the community's long-standing confusion.

However, a core question hangs over everyone's head: if the underlying network attempts a major protocol hard fork every six months, with its future tech roadmap constantly in flux, can the capital market truly willingly accept ETH as a value store asset?

Vitalik's Core Argument: ETH is a Value Store Asset

Deconstructing Vitalik's macro argument, its core logic primarily rests on four progressive pillars:

First, relying purely on fee burns to price ETH actually undermines Ethereum's valuation ceiling.

In traditional Net Present Value (NPV) valuation models, the annual burn amount divided by the discount rate provides a floor for the network's market cap. But the premise for this logic to hold is that network fees must primarily come from net inflows of real entities outside the ecosystem.

However, even during the bull market cycles from 2021 to 2023 when token burns peaked, most on-chain fee consumption still came from internal transactions within the crypto ecosystem. Once the secondary market price experiences a pullback, on-chain fees contract sharply accordingly, causing the envisioned valuation floor to plummet alongside the token price.

Second, if maximizing burns is set as the ultimate goal, it will force Ethereum to evolve into a highly centralized commercial entity.

If referenced against the R&D spending of tech giants of similar market cap, Ethereum would need at least 700,000 ETH in internal protocol funding annually, along with centralized decision-makers intervening to forcibly adjust development directions whenever market trends shift.

More importantly, blindly driving up gas fees in pursuit of burns completely contradicts Ethereum's original technical intent to scale the network and drastically reduce users' transfer costs.

Third, optimizing its value store attributes aligns perfectly with the core trait of Ethereum most recognized by the market today.

Global users embrace Ethereum fundamentally because of its unbreakable decentralized nature and the CROPS principles (censorship resistance, open-source transparency, user privacy, and foundational security), not because of minuscule burn-induced deflation rates.

The first major test for a value store asset is extreme survival capability. In engineering terms, this means prudent and conservative cryptographic algorithm selection, partial ossification of the protocol's core layer, minimal governance politicization, on-chain censorship resistance mechanisms based on FOCIL, and a node threshold lightweight enough that a standard laptop can run validation independently.

Figure: Vitalik's proposed framework aligning Ethereum decentralization with value store

Fourth, the more prosperous the variety of underlying assets issued on the Layer 1 mainnet, the stronger the practical utility of holding ETH.

Whether exchanging real-world assets (RWA) and emerging crypto assets for ETH on-chain, or using ETH as a core collateral to leverage liquidity release, all comprehensively elevate the rigid demand for holding and sinking ETH. The expansion of network ecology and the asset's value store attributes point in the exact same direction at their core.

Vitalik's final conclusion is that Ethereum is irreplaceable due to its unique decentralized foundation and CROPS principles; and the core belief in holding ETH long-term must also take root from these fundamental values. He hopes that the long-term value of the underlying network and the pricing logic of the asset itself can be completely unified on the same solid cornerstone.

The Technical Network That Must Change, vs. The Underlying Asset That Cannot Be Changed

We fully agree that fees and token burns have never been the source of ETH's value. However, before ETH can be truly accepted by the global mainstream market as a traditional value store asset, several thorny issues remain to be resolved, among which three challenges are the most severe.

The Indefinite Inflation Challenge Following the Loss of Burn Expectations

The first challenge is the net issuance pace of the token.

Once the obsession with achieving deflation through high-frequency burns is abandoned, ETH effectively becomes an indefinite-term asset with constant net annual issuance and no hard cap on total supply.

In this context, the token's value capture must completely bet on a brand-new macro expectation: that the continuous expansion of the underlying network scale will spontaneously drive up usage frequency for ETH and attract global capital to lock and hold it long-term.

Prior fee and burn data were clear, transparent financial indicators measurable with real-time precision. Unfortunately, there is currently no clear data model that can directly map the on-chain scale of RWA assets or traditional institutional adoption of Ethereum to the net demand for holding spot ETH.

In other words, ETH's asset valuation is regressing from a quantifiable cash flow model back to pure faith, dependent entirely on whether the market is willing to continuously form a consensus to hold.

Figure: Historical evolution of Ethereum's inflation rate and the EIP-1559 burn mechanism

The Potentially Shifting Monetary Policy of Ethereum

The second core challenge lies in the changeability of the token supply rules.

Even though the博弈 among various stakeholders regarding Ethereum's inflation control continues to unfold intensely. For example, the EIP-8363 proposal to modify Ethereum's emission curve, although temporarily removed from the initial scope of the Hegota upgrade, is still being actively advanced by its author through independent governance pathways.

Looking back, Ethereum has undergone multiple drastic shifts in monetary policy: the London hard fork formally introduced the EIP-1559 burn mechanism in 2021, and the merge to Proof-of-Stake (PoS) in 2022 significantly cut block issuance.

If an asset is to be universally recognized across humanity as a cycle-transcending value store medium, then regardless of how democratic or decentralized its on-chain governance system is, no one should possess the power to rewrite its issuance monetary policy at any time.

The Ultimate Coexistence Dilemma Between Tech Stock Positioning and Value Storage

The final core contradiction lies in: can Ethereum, as a continuously evolving technical network, ultimately coexist peacefully with ETH as an absolute value store asset?

Aiming for a value store, from an engineering endgame perspective, means Ethereum must gradually reduce drastic technological transitions. This convergent tendency is already quietly unfolding at the micro level.

The scale of the Ethereum Foundation is continuously shrinking and streamlining. After reaching the technical roadmap (Strawman) planned until 2029, its ultimate vision is to achieve the "Walkaway Test": even if the foundation and the current core development team withdraw completely, the Ethereum network will continue to operate fully autonomously.

However, an irreconcilable contradiction exists: Ethereum is essentially still a software technical architecture, and as long as it is technology, it is destined to face changes in the external environment.

The decryption threat from quantum computing could force upgrades at any moment; just as Ethereum is currently taking giant strides from full-node repeated execution to zero-knowledge proof (ZK) verification, it must respond in real-time to cutting-edge advancements in global computer science.

Technological iteration knows no bounds, meaning the Ethereum underlying network could face drastic architectural restructuring at any time. Throughout this prolonged evolution, as a financial asset, ETH's pricing will inevitably continue to be impacted by multiple factors: whether the roadmap is delivered on schedule, potential security vulnerability threats, and competition from new technical routes.

Figure: Trade-off game between complex technical architecture maintenance costs and asset credit

Bitcoin has undoubtedly undergone technical upgrades like SegWit and Taproot. But the reason Bitcoin has cemented its status as digital gold is fundamentally that holders firmly believe its most core underlying contract will never waver, no matter how its technical details are tweaked.

Ethereum is an extremely precise and complex distributed network. Its architectural complexity far exceeds Bitcoin and is even significantly higher than most high-performance public chains represented by Solana. Extreme systemic complexity inherently implies high maintenance costs and a broad attack surface.

The greater the magnitude and frequency of protocol updates, the more difficult it becomes to uphold unchanging commitments to the underlying asset. Whether such a complex system can maintain frequent self-innovation while still guarding the sacred immutability of its asset credit remains a huge question mark today.

In Conclusion: The Hard Commitments Ethereum Truly Needs to Fulfill

Even firm believers who view ETH as a value store asset today fundamentally expect Ethereum to demonstrate explosive growth power akin to high-growth tech stocks.

They simultaneously desire ETH to carry the sacred credit enjoyed by constant-value assets, yet urgently demand Ethereum deliver disruptive technological achievements of exponential growth.

Therefore, Ethereum must make clear foundational decisions: which core principles regarding ETH's value store are sacrosanct and inviolable, with the foremost being to completely hardcode its token issuance policy.

The CROPS principles regulate the underlying operational mechanisms of the Ethereum network, but they do not provide any economic hard-peg commitment for the token ETH itself.

A vision built merely on the pleasant assumption that "as ecological adoption grows, token usage naturally increases" can no longer convince mature investors who have weathered multiple bull and bear cycles. Ethereum now urgently needs to clearly prove to the world why every inch of ecological expansion in the underlying network can be seamlessly converted into the irreplaceable value of the ETH token itself.