Arca’s Jeff Dorman Calls Vitalik Buterin’s ETH Store-of-Value Pitch ‘Really Misguided’

Jeff Dorman said on Unchained that Ethereum co-founder Vitalik Buterin‘s case for ETH as a store of value is “really misguided.” Dorman, chief investment officer at crypto investment firm Arca, spoke on Thursday’s livestream.

Buterin laid out the case in an X thread on Nov. 8, saying ETH makes more sense as a store of value than as a “fee-burning token,” the role tied to EIP-1559, the fee change that came with Ethereum’s London upgrade in August 2021 and burns each transaction’s base fee. Optimizing for the burn, he wrote, “would demand Ethereum and ETH function in ways that are very hard to make compatible with decentralization and capture resistance.” Unchained covered the thread on Monday.

A store of value is a claim to be a currency, Dorman said, and ETH has no use “outside of the Ethereum network itself.” Buterin’s case, he said, requires arguing that “every other blockchain is going away.” Dorman said he does not disagree that the decentralization principles Buterin cites should be Ethereum’s vision, but said a case resting on philosophy is “just that memetic social value again,” his term for the “cool factor” in a token’s price.

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Ethereum “did $6 million of revenue in the last 30 days,” Dorman said, citing the data site DefiLlama, which showed about $6.2 million through Thursday by Unchained’s check of its Ethereum data. Calling it $10 million a month to allow for a weak month, annualizing that to $120 million and applying a 20-times multiple gets him to a couple of billion dollars.

He cited estimates that about 200 million Ethereum wallets hold an average of 0.1 ETH for gas, the network’s transaction fees, worth about $40 billion. In all, he could account for about $45 billion to $50 billion of the roughly $246 billion he put on ETH, leaving about $200 billion of “just social value or hopium.” ETH traded at about $1,930 on Friday, worth about $236 billion in all, according to CoinGecko’s ETH data.

Dorman said “the only successful layer one” (base blockchain) “is what Hyperliquid’s doing,” pointing to the trading platform’s own blockchain, exchange and stablecoin distribution. On Ethereum, he said, apps like Uniswap and issuers like Circle keep that revenue.

If Ethereum believes “these applications need you so badly,” Dorman said, it should “tax them” and “see how many actually stay and pay the tax versus going to another cheaper blockchain.” He named no rate but said it would have to be “a pretty high number.”

Dorman allowed that “Ethereum might be worth $10 trillion one day.”

Related Listen: Is Ethereum’s $240 Billion Market Cap Justified With Only $6 Million in Monthly Fees?

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