According to market analyst and CEO of the cryptocurrency market analysis platform CryptoQuant, Ki Young Ju, 9 out of 12 commonly used valuation models indicate that Ethereum's native token, Ether (ETH), is undervalued.
The combined "fair value" using all 12 valuation models prices ETH at approximately $4,836, representing an increase of over 58% compared to the price at the time of writing this article.
Each valuation model is rated on a three-tier reliability standard, with tier three being the most reliable. Eight of the 12 models have a reliability rating of at least tier two. Ju stated, "These models are constructed by trusted experts from academia and traditional finance."
According to ETHval data, the application of the capital valuation model considers total on-chain assets, including stablecoins, ERC-20 tokens, non-fungible tokens (NFTs), real-world tokenized assets (RWAs), and bridging assets, setting the fair value of ETH at $4,918.
Using Metcalfe's Law—which states that the value of a network is proportional to the square of the number of real active users or the number of nodes in the network—predicts the price of ETH to be $9,484, indicating that the asset is undervalued by over 211% according to this model.
Valuing ETH through a Layer 2 (L2) framework—which considers the total locked value (TVL) in the Ethereum Layer 2 scaling network ecosystem—predicts a price of $4,633 per ETH, suggesting that ETH is undervalued by about 52%.
The Ethereum community and analysts continue to debate how to accurately value the world's first smart contract platform, with many stating that traditional valuation models are insufficient for valuing emerging digital assets and decentralized blockchain networks.
The yield valuation model—which values ETH by dividing the annual income generated by the network by the staking yield of ETH—indicates that at the current price of over $3,000, ETH is overvalued by more than 57%.
According to ETHval's standards and methods, yield is the most reliable valuation model for accurately pricing ETH.
Based on this model, the price tag for ETH should be around $1,296, highlighting the decline in the Ethereum network's revenue-generating capacity as fees hit historical lows and competing networks absorb some of its market share.
Related: Santiment: Based on low stablecoin yields, Ether (ETH) may soon return to $3,200
Original article: “Analyst: Most Valuation Models Show Ethereum (ETH) is Undervalued”
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