With the Solana community set to vote on SIMD-0550, known as “Double Disinflation Speed,” and SIMD-0553, “Resource Fees,” Max Resnick has used the moment to push a much broader question: how should a Layer 1 blockchain be valued in the first place?
Resnick, the former head of research at Consensys and now an important developer in the Solana ecosystem, argues that the crypto market still lacks a framework that connects chain activity to asset value. He compares the current state of L1 valuation to the stock market in the late 1920s: plenty of growth stories, but no durable method for turning those stories into a price for the asset.
Developer counts hitting records, transaction volumes reaching new highs, claims that a token could become money, “digital oil,” or an option on the future financial system may all be valid narratives on their own. But Resnick says they are incomplete unless they show how that activity becomes tokenholder surplus.
Applying an equity lens to L1 tokens
Resnick starts with traditional asset pricing theory. He points to John Burr Williams’ 1938 book The Theory of Investment Value, which framed a stock’s value as the present value of discounted future dividends. He also cites Merton Gordon’s argument that stocks, like other assets, derive value from the future income holders expect to receive.
That leads to a straightforward conclusion: a company does not deserve a valuation simply because it is important, growing quickly or difficult to replace technologically. What matters is how much value shareholders can ultimately extract from the economic activity the company creates. Resnick says the same logic should apply to L1 tokens.
For blockchains, network revenue can flow back to token holders in two main ways. One is fee burning, which has an economic effect similar to stock buybacks. The other is distributing fees to stakers, which resembles dividends paid to shareholders.
Under that framework, a blockchain handling millions of transactions a day does not automatically produce equal value for its token. If most of the economic surplus created by those transactions ends up with applications, validators, MEV searchers or other intermediaries, rather than token holders, then large transaction counts may still generate limited tokenholder value.
The reverse can also be true. A chain with lower transaction volume could, in theory, be worth more as an asset if it converts a larger share of economic activity into gains for token holders.
Why staking inflation is not automatically revenue or cost
Another major piece of the framework is how to treat inflationary staking rewards, one of the most common features in blockchain economics. Resnick argues that staking rewards paid through newly issued tokens should not automatically be counted as revenue created by the network. He also says they should not automatically be booked as an external cost.
His reasoning is that newly issued tokens are created by the protocol and handed to stakers, which effectively dilutes holders who do not stake and transfers value to those who do. From the perspective of all token holders combined, that positive and negative effect offsets itself.
That is why, in his view, it is wrong to look at large SOL payouts to validators and stakers and conclude on that basis alone that Solana is “unprofitable.”
He adds that analysts can choose to treat inflationary rewards as a cost, but only if they also recognize newly issued tokens as a corresponding source of value. Otherwise, the accounting framework becomes distorted.
He raises a similar issue around foundation-held tokens and spending. If foundation spending is already treated as an operating cost, then unspent foundation tokens should not also be fully counted in a circulating-supply-based valuation model, because that risks double counting.
For that reason, Resnick says L1 valuation needs clear and consistent standards for classifying revenue, cost and total supply.
Not all fees deserve the same multiple
Even if fees are accepted as the revenue line worth watching, Resnick says the analysis cannot stop there. He places heavy emphasis on revenue quality.
He draws a comparison to how equity investors analyze SaaS companies and pay close attention to annual recurring revenue, or ARR, because recurring revenue is more durable than one-off revenue. He says the same principle can be applied to blockchains.
One dollar in fees generated by stable, long-running financial activity is not the same as one dollar generated by airdrop farming, meme coin speculation, liquidation waves or short-lived network congestion. Those revenue streams should not receive the same valuation multiple.
Resnick says two tests matter most: persistence and defensibility. Investors need to judge whether users are paying because the blockchain provides economic utility they cannot easily replace, or because a burst of short-term speculation has flooded into the chain. They also need to ask whether that revenue remains once subsidies end and volatility cools.
There is a second question attached to this: can a public blockchain raise prices without pushing transactions, applications and order flow elsewhere?
Resnick says Solana and Ethereum may have stronger pricing power than the market assumes
In Resnick’s view, the crypto market may have made mistakes in both directions.
On one side, investors may have overestimated fee quality because a large share of on-chain activity is speculative, reflexive and cyclical. Fee spikes seen in bull markets may not hold up over time.
On the other side, investors may also have underestimated the network effects of mature L1s. Liquidity, applications, wallets, infrastructure, users, developers, on-chain assets and order flow reinforce one another, giving major chains a stronger moat than they may appear to have at first glance.
That leads to one of his more pointed conclusions: established blockchains such as Solana and Ethereum may have stronger pricing power than the market broadly assumes, so raising prices may not lead to a one-for-one drop in demand.
That brings the discussion back to Solana’s current fee reform debate.
A fee increase can lift price per transaction, but demand may fall
The most obvious way to raise blockchain revenue is to charge more per transaction. Resnick’s caution is simple: revenue equals price multiplied by quantity. Raising fees can increase revenue per transaction, but it can also reduce demand, so the final outcome depends on price elasticity.
He says he previously studied random variation in EIP-1559 pricing and found that a 10% increase in price could reduce transaction demand by about 6% to 8%.
That result, however, only reflects short-term price changes. If higher prices persist, applications may optimize their code, cut back on on-chain operations or move to another blockchain altogether. Long-term demand responses could be more complicated.
The same resource cost does not imply the same willingness to pay
Resnick argues that one of the deepest structural problems in blockchain fee design today is that transactions have very different willingness to pay.
Traditional L1 fee systems are closer to resource-based pricing. A user pays according to how much compute a transaction uses, how much blockspace it occupies and how much storage it consumes. But a small wallet transfer, a large stablecoin transfer and a DeFi position on the verge of liquidation can carry very different economic value and very different maximum willingness to pay.
That is the gap between resource-based pricing and value-based pricing. Resnick’s point is that identical resource usage does not mean identical economic value or identical willingness to pay.
He says bot activity is especially sensitive to price. Using Solana data, he notes that addresses from the same fee payer making more than 250 transactions in a single epoch are more likely to be bots. Those strategies often run on very thin margins, so even a modest increase in fees could cut activity sharply.
If Solana raises prices uniformly for all transactions, some of the first activity to disappear may be those high-frequency, low-margin trades.
Yakovenko’s 0.5 basis point proposal points to value-sensitive fees
Because of that, Resnick says a better path than a broad increase in gas fees may be some form of differentiated pricing.
Solana co-founder Anatoly Yakovenko has recently floated one direction: charge 0.5 basis points on all SPL token transfers, equal to 0.005% of transaction value.
The design is closer to how centralized exchanges charge a percentage of traded notional. Even if two transfers consume the same compute resources, a $100 transfer and a $1 million transfer may involve very different willingness to pay.
Resnick argues that in financial activity, notional volume often captures willingness to pay better than compute consumption. One possible route, he says, is to modify the Token Program so token transfers are charged a very small fee based on value transferred. That would make high-value transfers pay more while keeping smaller transfers inexpensive.