The native token of the Ethereum network, Ether (ETH), is undervalued in nine of 12 commonly used valuation models, according to Ki Young Ju, market analyst and CEO of crypto market analysis platform CryptoQuant.
A composite “fair value” using all 12 valuation models values ETH at around $4,836, a gain of over 58% from its price at the time of this writing.
Each assessment model was rated on a three-level reliability scale, with three being the most reliable. Eight of the 12 models have a reliability rating of two or more. “These models were built by trusted experts from academia and traditional finance,” Ju said.
The App Capital valuation model, which considers total on-chain assets including stablecoins, ERC-20 tokens, non-fungible tokens (NFT), real-world tokenized assets (RWA) and bridged assets, value ETH at a fair value of $4,918, according to ETH value.
Using Metcalfe’s Law, which states that the value of a network increases proportionally to the square of actual active users or the number of nodes in the network, an ETH price of $9,484 is predicted, meaning the asset is undervalued by over 211%, depending on the model.
Valuing ETH via the Layer-2 (L2) framework, which represents the total value locked (TVL) in Ethereum layer 2 scaling network ecosystem, predicts a price of $4,633 per ETH, meaning ETH is undervalued by around 52%.
The Ethereum community and analysts continue to debate how to properly value the world’s leading smart contract platform, with many arguing that traditional valuation models are not enough to evaluate nascent digital assets and decentralized blockchain networks.
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Despite the rather optimistic outlook, a valuation model indicates that ETH is significantly overvalued.
The Revenue Yield valuation model, which values ETH based on annual revenue generated by the network divided by the yield from staking on ETH, indicates that ETH at current prices of over $3,000 is overvalued by over 57%.
Revenue Yield is the most reliable valuation model to accurately value ETH, based on ETHval’s criteria and methodology.
ETH is expected to cost around $1,296, according to the model, highlighting the importance of the Ethereum network. decrease in revenue generation as fees reach record levels and competing networks absorb part of its market share.
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