In a groundbreaking analysis, asset management firm VanEck, known for managing a $69 billion ETF, predicted that the price of Ethereum (ETH) will skyrocket to $11,800 by the year 2030.
VanEck utilized a comprehensive valuation model that incorporates cash flow forecast and FDV calculation to arrive at this optimistic projection.
VanEck’s report highlights the recent hard fork of Ethereum, enabling users to withdraw staked ETH and presenting a significant new rival to US Treasury bills.
This development prompted the firm to revisit its ETH estimates using a more rigorous valuation approach. They now anticipate ETH network revenues to surge from $2.6 billion annually to an astonishing $51 billion by 2030.
To arrive at the projected token price, VanEck assumes that Ethereum will capture 70% of the market among smart contract protocols.
Based on this assumption, they arrive at a token price of $11.8k in 2030, which, when discounted at a 12% cost of capital derived from ETH’s recent beta, equates to $5.3k in today’s valuation.
The valuation methodology employed by VanEck considers various factors such as transaction fees, MEV (Miner Extractable Value), and the concept of “Security as a Service.”
They assess the potential market capture across key sectors and explore Ethereum’s evolving role as a store-of-value asset in the cryptocurrency landscape.
The report delves into the recognition of revenue for Ethereum, classifying token usage within its core business activities. VanEck includes both base fees and tip fees as revenue lines, contrary to other analysts who only consider base fees.
They argue that both fees reflect economic activity related to the sale of blockspace, making them essential revenue sources for ETH.
Ethereum’s Potential As A Store-of-Value Asset
Moreover, VanEck recognizes the value of MEV, with a portion accruing to ETH stakers, and proposes that block-building fees should be included in Ethereum’s revenue calculations.
They assert that Ethereum is evolving beyond a transactional currency and, while not a complete store of value like Bitcoin, ETH will become a store-of-value asset for state actors seeking to maximize human capital.
The analysis further explores ETH’s transaction revenue, assessing market capture, business categories, and value accrual. VanEck assumes a take rate on business economic activity derived from blockchain deployment and estimates varying percentages for different end markets.
They anticipate that off-chain businesses will increasingly deploy on-chain, reducing costs and seeking new revenue opportunities.
Based on their base case scenario, VanEck projects Ethereum’s annual revenue to reach $51 billion by 2030. After deducting validator fees and taxes, they arrive at a cash flow figure of $42.90 billion.
Using a multiple of 33x and considering the total token supply, VanEck sets a base case price target of $11,848 per ETH in 2030. Discounting this figure at a 12% rate, they determine the present-day valuation to be $5,359.71.
VanEck’s analysis underscores the potential for Ethereum to emerge as a dominant global settlement network, hosting significant portions of commercial activity across various sectors.
The firm acknowledges the uncertainty surrounding Ethereum’s future but remains bullish on its prospects, considering it a promising investment alongside other smart contract platforms.
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