In a recent report, investment management firm VanEck predicts that the price of the Ethereum (ETH) token could rise to $11,800 by 2030. The forecast is based on the revised valuation model that estimates that revenue from the network Ethereum will increase significantly from the current $2.6 billion annually to $51 billion by the end of this decade, assuming Ethereum retains a 70% market share among smart contract protocols.

The valuation methodology of this report is based on the projection of future cash flows. These projections take into account Ethereum’s estimated revenue, a global tax rate, and a share of revenue for validators. The cash flow yield is set at 7%, with a long-term crypto growth rate of 4%. This results in a fully diluted valuation (FDV) of Ethereum, which is then discounted by 12% to provide an estimate of Ethereum’s current value.

Ethereum income comes from transaction fees and Mining Extractable Value (MEV). Users bear these costs for using services on the Ethereum blockchain, with a portion of these transaction costs allocated to validators and the remainder being revenue for Ethereum. In addition, Ethereum’s “Security as a Service” (SaaS) model also stands out as a potential revenue stream, enabling protection of external applications, protocols, and ecosystems.

The report also discusses the potential of various economic sectors, such as Finance, Banking, Payments (FBP), Metaverse, Social and Gaming (MSG), and Infrastructure (I), shifting their activities to smart contract platforms. Current trends suggest that companies could cover transaction fees to simplify the user experience, a practice that would reflect traditional business models.

VanEck’s report highlights the crucial role of MEV in blockchain security due to its high value and sees Layer 2 (L2) solutions as the future of Ethereum transaction execution, despite potential competition. of numerous L2 chains.

However, the report also acknowledges the uncertainties surrounding Ethereum’s future, reflected in the use of a 12% discount rate in its pricing model.