- Global investment manager VanEck projects Ethereum’s value will reach $11,800 by 2030, competing with U.S. Treasury bonds.
- The valuation takes into account factors such as transaction fees, miner-extractable value (MEV), and “security as a service.”
VanEck’s Ethereum Valuation Analysis
In a comprehensive report by VanEck, the firm predicts a meteoric rise in the value of Ethereum (ETH) to an astonishing $11,800 by 2030, positioning it as a serious contender to U.S. Treasury bonds. This projection was derived through a valuation analysis, discounting Ethereum at a rate of 12% to calculate its current value, which amounts to a base case valuation of $5,359.71.
The authors of this report, Matthew Sigel, Head of Digital Assets, and Patrick Bush, a Senior Research Investment Analyst for Digital Assets, meticulously analyzed Ethereum’s valuation. Factors such as transaction fees, MEV, and “security as a service” were taken into account in their analysis, along with Ethereum’s market share in key sectors and its potential as a store of value in the expanding cryptocurrency market.
VanEck’s report projects that the ETH network’s annual average revenue will surge from $2.6 billion to $51 billion by 2030, assuming Ethereum dominates 70% of the smart contract protocols market.
Ethereum’s Economic Transformation and Proto-danksharding
Ethereum is preparing for a transformative shift with the proposed EIP-4844, or “proto-danksharding”. The primary goal of this upgrade is to improve Ethereum’s scalability, and it is expected to be introduced during the Deneb-Cancun upgrade, slated for late Q3 or early Q4 2023.
Data from IntoTheBlock suggests that EIP-4844’s introduction will drastically cut the costs associated with Ethereum Layer 2 solutions, potentially reducing them by a factor of 10 to 100. While EIP-4844 might temporarily reduce the amount of ETH burned due to the lowered fees on Layer 2 solutions, the overall expansion in Ethereum’s economic activity is predicted to augment its value accumulation in the medium term.
In conclusion, after adjusting for a validator fee of 1% and a 15% global tax rate, VanEck estimates Ethereum’s cash flows at $42.90 billion by 2030. Using a 12% cost of capital derived from Ethereum’s recent beta, VanEck forecasts an impressive base-case price target of $11,848 per token by 2030, discounting it to a present price of $5,300.
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