Global investment firm VanEck expects the price of ETH to reach $11,800 by 2030, given that Ethereum achieves $51 billion in annual revenue in that year.
The report, written by VanEck’s digital assets research head Matthew Sigel and its digital assets senior investment analyst Patrick Bush, considers Ethereum’s transaction fees, MEV, and “Security as a Service” to reach the conclusion.
The duo said their price prediction assumes that Ethereum takes a 70% market share among smart contract protocols. They noted:
“The base of our projections comes from the smart contract platform “market capture.” This is the percentage of each business category’s economic activity that we believe will utilize, be derived from, or reside on public smart contract platforms like Ethereum.”
They recognized finance, banking and payments, metaverse, social and gaming, and infrastructure as their main categories, adding that they expect 5%, 20%, and 10% of finance, metaverse/media, and tech infrastructure activity, respectively, will move on-chain.
The authors also assumed a take rate on the business economic activity derived from blockchain deployment to simplify the user experience.
They used gas costs users pay to interact with an on-chain business’s smart contracts to determine the breakdown ratio of revenues between Ethereum and the businesses.
Ethereum’s Transaction Fees and MEV to Drive ETH Price Up
The VanEck analysts also acknowledged ETH system transaction fees and Maximum Extractable Value (MEV) as a revenue line.
Moreover, Sigel and Bush explored its store-of-value potential in the crypto space. According to the analysts, ETH’s new proof-of-stake status could see the crypto rival US T-bills.
“Due to smart contract programmability on Ethereum combined with maturing cross-chain messaging technology, we introduce a novel revenue item called “Security as a Service” (SaaS),” they added.
The analysts explained that ETH’s value could be used both within Ethereum and outside of it to secure applications, protocols, and ecosystems.
For instance, ETH can be locked behind some business or protocol’s guarantees to act honestly, and if violated, that value can be seized to penalize malicious or irresponsible parties or compensate affected parties.
ETH holders who participate in SaaS should be rewarded at some multiple to the summed value of priority fees, tips, block-building fees, and ETH inflationary issuance based on the average security risks and investment risks involved in offboarding ETH as a security provision asset.
All in all, in a base case scenario, the analysts said they expect Ether to achieve an annual revenue of $51 billion in the year ending April 30th, 2030.
They then deducted a 1% validator fee from the total and a 15% global tax rate to arrive at a $42.90 billion cash flow for the same period.
“Assuming an FCF multiple of 33x, 120.7M token, we come to a Base Case 2030 Price Target of $11,848 per token,” they concluded.
“To determine a valuation in today’s dollars, we discount Ethereum at 12% despite finding, through CAPM, an 8.74%. We use this elevated figure to reflect increased uncertainty around the future of Ethereum. As a result, we find today’s discounted price to be $5,359.71 in our Base Case.”
Global investment firm VanEck expects the price of ETH to reach $11,800 by 2030, given that Ethereum achieves $51 billion in annual revenue in that year.
The report, written by VanEck’s digital assets research head Matthew Sigel and its digital assets senior investment analyst Patrick Bush, considers Ethereum’s transaction fees, MEV, and “Security as a Service” to reach the conclusion.
The duo said their price prediction assumes that Ethereum takes a 70% market share among smart contract protocols. They noted:
“The base of our projections comes from the smart contract platform “market capture.” This is the percentage of each business category’s economic activity that we believe will utilize, be derived from, or reside on public smart contract platforms like Ethereum.”
They recognized finance, banking and payments, metaverse, social and gaming, and infrastructure as their main categories, adding that they expect 5%, 20%, and 10% of finance, metaverse/media, and tech infrastructure activity, respectively, will move on-chain.
The authors also assumed a take rate on the business economic activity derived from blockchain deployment to simplify the user experience.
They used gas costs users pay to interact with an on-chain business’s smart contracts to determine the breakdown ratio of revenues between Ethereum and the businesses.
Ethereum’s Transaction Fees and MEV to Drive ETH Price Up
The VanEck analysts also acknowledged ETH system transaction fees and Maximum Extractable Value (MEV) as a revenue line.
Moreover, Sigel and Bush explored its store-of-value potential in the crypto space. According to the analysts, ETH’s new proof-of-stake status could see the crypto rival US T-bills.
“Due to smart contract programmability on Ethereum combined with maturing cross-chain messaging technology, we introduce a novel revenue item called “Security as a Service” (SaaS),” they added.
The analysts explained that ETH’s value could be used both within Ethereum and outside of it to secure applications, protocols, and ecosystems.
For instance, ETH can be locked behind some business or protocol’s guarantees to act honestly, and if violated, that value can be seized to penalize malicious or irresponsible parties or compensate affected parties.
ETH holders who participate in SaaS should be rewarded at some multiple to the summed value of priority fees, tips, block-building fees, and ETH inflationary issuance based on the average security risks and investment risks involved in offboarding ETH as a security provision asset.
All in all, in a base case scenario, the analysts said they expect Ether to achieve an annual revenue of $51 billion in the year ending April 30th, 2030.
They then deducted a 1% validator fee from the total and a 15% global tax rate to arrive at a $42.90 billion cash flow for the same period.
“Assuming an FCF multiple of 33x, 120.7M token, we come to a Base Case 2030 Price Target of $11,848 per token,” they concluded.
“To determine a valuation in today’s dollars, we discount Ethereum at 12% despite finding, through CAPM, an 8.74%. We use this elevated figure to reflect increased uncertainty around the future of Ethereum. As a result, we find today’s discounted price to be $5,359.71 in our Base Case.”