• ETH
• Jun 20, 2023
• 3 min read

Global Investment firm VanEck has predicted what the price of Ethereum could be in the year 2030

VanEck's digital assets research head Matthew Sigel and its digital assets senior investment analyst Patrick Bush have released a report predicting that if Ethereum achieves $51 billion in annual revenue in 2030, the price of ETH will reach $11,800.

They averred that, with Ethereum taking a 70% market share among smart contract protocols, the prediction takes into account transaction fees, MEV, and “Security as a Service”, as well as finance, banking and payments, metaverse, social and gaming, and infrastructure as their main categories.

The authors assumed a take rate on the business economic activity derived from blockchain deployment and gas costs users pay to interact with on-chain contracts to determine the ratio of revenues between Ethereum and businesses.

Ethereum's Transaction Fees and MEV to Drive ETH Price Up

The VanEck analysts acknowledged that Ethereum (ETH) system transaction fees and Maximum Extractable Value (MEV) can be seen as a potential revenue line. Furthermore, Sigel and Bush examined its capacity as a store of value within the crypto sector.

They suggested that Ethereum's newly implemented proof-of-stake system could possibly compete with US Treasury bills. Additionally, they brought up "Security as a Service" (SaaS) as a novel source of revenue.

ETH may be actively used both within and outside Ethereum to secure certain applications, protocols, and ecosystems.

As an example, ETH could be locked up behind a business or protocol's guarantees to act honestly. In the event of a violation, the ETH would be seized to penalize any malicious or irresponsible parties or compensate those impacted.

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."