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Global investment manager VanEck predicts that the price of ETH will reach $11,800 in 2030 and that ETH will become a competitor to U.S. Treasury bonds.
VanEck discounted Ethereum at 12% to calculate its value in current dollars, finding that in the base case, the discounted price today is $5,359.71.
VanEck, which manages a $69 billion ETF, predicts that the price of ETH will reach $11,800 in 2030, and ETH will become a competitor of U.S. Treasury bonds. The specific valuation methods are cash flow forecast and FDV calculation. https://t.co/bxTUJ3T4t3
— Wu Blockchain (@WuBlockchain) June 5, 2023
This is stated in a report written by Matthew Sigel, head of digital assets, and Patrick Bush, a research senior investment analyst for digital assets.
In this report, VanEck presents the results of its analysis and offers a clear valuation methodology for Ethereum, taking into account transaction fees, MEV and "security as a service."
Additionally, it evaluates market share across key sectors and investigates Ethereum's potential as a store of value in the burgeoning cryptocurrency market.
VanEck projects that by 2030, ETH network revenue will have increased from a yearly average of $2.6 billion to $51 billion. This is predicated on the assumption that ETH controls 70% of the market for smart contract protocols.
According to VanEck researchers' base case, Ethereum would generate $51 billion in revenue during the fiscal year that ends on April 30, 2030. It subtracts 1% for a validator fee and 15% for the global tax rate from this amount to get cash flows to Ethereum of $42.90 billion.
Thus, it arrives at a base-case 2030 price target of $11,848 per token. This is discounted to a current price of $5,300 at a 12% cost of capital derived from ETH's recent beta.
Ethereum to see economic shift
The main objective of Ethereum's EIP-4844, often known as "proto-danksharding," is to increase the scalability of Ethereum.
It is intended to be deployed during the Deneb-Cancun upgrade, which is scheduled to occur in the latter half of Q3 or the first quarter of Q4, 2023.
According to IntoTheBlock, the introduction of EIP-4844 is expected to dramatically cut the costs associated with using Ethereum Layer 2 solutions, which are predicted to be at least 10 times lower and possibly even up to 100 times lower.
Although there may be a short-term decrease in ETH burning due to the fee reduction on L2 solutions, the development of Ethereum's total economic activity is anticipated to lead to greater value accumulation in the medium term.
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