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As transaction fees become cheaper, is ETH still worth holding long-term?

On November 8, Ethereum co-founder Vitalik Buterin shared an intriguing perspective on X:

The value of ETH should be based more on the network's security and decentralization rather than overly relying on fee burning.

This statement seems to be a shift in a technical narrative, but it touches on the core issue of ETH's long-term valuation:

If Ethereum's transaction fees continue to decrease and the amount burned keeps reducing, what will support ETH's long-term value?

In recent years, the Ethereum community has emphasized a concept: Ultrasound Money.

In simple terms, the more active the network usage, the more fees are burned, and the circulating supply of ETH is likely to decrease, potentially even entering a net deflationary state.

However, now it seems Vitalik is reminding the market: do not stake all of ETH's value on this logic.

1. What exactly did Vitalik say? The value logic of ETH is shifting

Vitalik expressed several important points this time:

• Even if fee burning stays below the so-called breakeven level of 10% for a long time, ETH holders should not feel disappointed.
• The narrative of ETH as a fee-burning token may have been given too much weight by the market in the past.
• EIP-1559 should remain, but fee burning should not become the core support of ETH's value.

He emphasized the long-term attributes of the Ethereum network itself, including decentralization, censorship resistance, open-source nature, privacy, and security.

These attributes can be summarized as CROPS:

• C: Censorship Resistance and Anti-Capture, the network is not easily controlled by a single entity or interest group.
• R: Open and Free Network Environment, lowering the threshold for participation and usage.
• O: Open Source, Transparent Protocol, anyone can audit and participate in its development.
• P: Privacy, protecting user and transaction-related information.
• S: Security, ensuring that assets and transactions are reliably protected.

It is important to clarify:

Vitalik is not suggesting the cancellation of EIP-1559, nor is he denying the ETH burning mechanism.

What is truly changing is the market's understanding of ETH's value:

In the past, there was more emphasis on how much ETH was burned; now, there is a greater emphasis on what irreplaceable value the Ethereum network actually provides.

2. Why is Ethereum starting to weaken the "fee burning" narrative?

To understand this adjustment, one must first look at the development of Ethereum over the past few years.

In 2021, EIP-1559 was officially launched, introducing a base fee burning mechanism.

When users initiate transactions on the Ethereum mainnet, part of the base fee will be burned. The busier the network, the higher the fees, and the more significant the burning amount.

During the active market period of 2021-2022, this mechanism indeed provided an easy-to-understand value narrative for ETH:

Increased network usage → Increased fees → Increased ETH burning → Reduced circulating supply.

This was also a key reason why the "Ultrasound Money" narrative attracted market attention.

However, the problem is that Ethereum's technological path has changed.

With the development of Rollups and Layer 2 ecosystems, an increasing number of transactions are no longer happening directly on the Ethereum mainnet but are instead moving to Layer 2 networks like Arbitrum, Optimism, and Base.

This has led to an apparently contradictory result:

The usage scope of the Ethereum ecosystem may be expanding, but the mainnet fees and ETH burn amounts may not increase in tandem.

The reasoning behind this is not complex:

• Layer 2 handles a large volume of transactions, reducing user costs.
• The Ethereum mainnet is responsible for providing data availability, settlement, and security assurance.
• Users completing transactions on Layer 2 do not mean that each transaction needs to pay the same scale of fees on the mainnet.

Thus, a question arises:

If Ethereum wants transactions to be cheaper and for the user base to grow, it cannot simply rely on maintaining high mainnet fees to support ETH's value.

The more successful the network is in lowering the cost of use, the lower the fee revenue directly captured by the mainnet may become.

This is precisely the background against which Vitalik is re-emphasizing the values of network security and decentralization.

3. Does cheaper fees mean that ETH has less value?

This should not be understood that way.

Fee reductions primarily indicate that user costs of using the network have decreased, but it does not necessarily mean that the network's value has declined.

Here, it is important to distinguish between two concepts:

The value created by the network is not equal to the value directly captured by ETH through transaction fees.

For example:

Suppose a user completes a transfer through Layer 2, only needing to pay a few cents instead of several dollars on the mainnet.

For the user, this is a clear improvement in experience.

However, for ETH holders, further observation is needed:

1. Do these Layer 2 solutions still rely on Ethereum for security and data availability?
2. Is the transaction volume and number of users on Layer 2 growing sustainably?
3. How much settlement, data publication, and other fee demands will these activities ultimately bring to the Ethereum mainnet?
4. Does demand for ETH persist in staking, collateral, network security, and ecosystem applications?

These indicators are more helpful in judging whether the growth of the Ethereum ecosystem can translate into ETH's long-term value.

In other words, it's not just about how many users Ethereum has; it's also about what these users' activities actually create in terms of real demand for ETH.

This also highlights an important difference between the value logic of ETH and BTC.

The core narrative of BTC revolves more around scarcity, currency properties, and value storage; ETH, on the other hand, simultaneously serves multiple roles as a network asset, staking asset, collateral, and ecosystem infrastructure.

The two are not the same type of asset and should not simply apply the same valuation methods.

4. What should ordinary investors focus on?

For ordinary investors, Vitalik's statement this time is not a direct buy or sell signal but a reminder that when assessing ETH, one needs to shift from a single narrative to multidimensional observation.

First, do not just focus on the amount of ETH burned.

A decrease in burning amount does not mean ETH has lost its value; an increase in burning amount does not necessarily mean prices will rise.

ETH still has protocol issuance; whether there is net deflation depends on the relationship between issuance and burning amounts.

Therefore, in addition to burning data, one should also observe staking situations, network usage, and actual demand.

Second, pay attention to whether Layer 2 development is genuinely benefiting Ethereum.

Increased Layer 2 transaction volume is a good thing, but one cannot only look at the number of transactions.

More importantly: Are users continuing to use it? Is the ecosystem generating real demand? Does Layer 2 still rely on the Ethereum mainnet for critical security and settlement capabilities?

If ecosystem activities are growing but fail to generate effective demand for ETH, then there may be a disconnect between ecosystem prosperity and ETH prices.

Third, do not temporarily adjust positions just because of changes in narrative.

The market used to favor the narrative of "Ultrasound Money," while now Vitalik emphasizes "value storage" and network security.

However, regardless of which narrative it is, it cannot be directly equated with the logic of price increase.

If considering allocating ETH, one should first clarify their investment horizon, risk tolerance, and position limits, adopting a phased allocation approach rather than chasing after price rises or selling in panic due to a change in perspective.

5. Three signals worth observing next

The real focus of this discussion should not be on Vitalik changing his wording but on whether the market will gradually accept a new ETH valuation framework.

Subsequently, one can focus on observing:

1. ETH burning and issuance: Will the burning amount remain low over the long term? Will ETH continue to be in a state of net issuance?
2. Layer 2 ecosystem: Are the users, transaction volumes, and fee revenues of major L2s continuing to grow? Can these activities bring actual demand to the Ethereum mainnet?
3. Institutional allocation: Are institutions and long-term investors still willing to view ETH as an important crypto asset allocation? Do related positions and capital flows show continuous changes?

Furthermore, Ethereum's long-term technological roadmap is still advancing, including research and upgrades around scaling, security, and post-quantum cryptography. Progress in directions like Lean Ethereum is worth continuous tracking, but one should not treat long-term technical goals as capabilities that have already been realized.

In conclusion: The value of ETH cannot only be proven by "how many coins have been burned"

The most significant implication of Vitalik's statement this time is to remind the market to rethink a question:

Is Ethereum merely a machine that makes money from fees, or is it a decentralized financial infrastructure worthy of long-term trust?

If ETH's value relies solely on fee burning, then when Layer 2 reduces transaction costs more and more, this narrative will naturally face pressure.

However, if Ethereum can continue to provide a secure, open, and censorship-resistant settlement environment and enable more financial applications, assets, and users to build on its ecosystem, then ETH's value should not be measured solely by how many coins are burned daily.

Of course, this does not mean that ETH will necessarily become a value storage asset.

Network security, ecosystem growth, and real demand will ultimately need to be proved through verifiable data.

For investors, what really needs to be judged is not whether ETH can continue to tell a good story, but whether this network can continuously create value, and whether this value can eventually transfer to ETH itself.

Risk warning: The prices of crypto assets are highly volatile, and changes in technological direction and market narratives do not necessarily indicate price rises or falls. This article is for informational analysis only and does not constitute investment advice.

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