Should Ethereum Tax Its Apps Like a Nation? Arca's Jeff Dorman Says It Has To

Jeff Dorman argues that Vitalik Buterin is right that optimizing ETH purely as a fee-burning asset would push Ethereum toward behaving like a stock. But he says the opposite extreme is also a problem: if Ethereum is meant to function like a networked nation, it still needs some way to capture value from the applications and activity built on top of it.

Dorman uses a closed-island analogy to say a currency only becomes meaningfully valuable when the underlying economy is taxed. In his view, Ethereum and other blockchains currently do not tax the applications using their ecosystems, so the native token has no clear claim on the value created there. He says that if users can move fluidly across hundreds of blockchains, there is no durable closed system where one chain’s currency can accumulate that kind of economic power.

He also pushes back on the idea that ETH’s value can be justified simply by its role as a payment token inside the network. The broader point is that if Ethereum does not capture some economic rent from the activity it hosts, then it is hard to explain why its native currency should appreciate beyond speculative demand.