Most Ethereum valuation models indicate ETH is undervalued: Analyst

The native token of the Ethereum network, Ether (ETH), is undervalued in nine out of 12 commonly used valuation models, according to Ki Young Ju, a market analyst and CEO of crypto market analysis platform CryptoQuant.

A composite “fair value” using all 12 valuation models prices ETH at about $4,836, an over 58% gain compared to its price at the time of this writing.

Each valuation model was rated on a three-tiered scale for reliability, with three being the most reliable. Eight out of the 12 models feature a reliability rating of at least two. “These models were built by trusted experts across academia and traditional finance,” Ju said. 

The App Capital valuation model, which accounts for total on-chain assets, including stablecoins, ERC-20 tokens, non-fungible tokens (NFTs), real-world tokenized assets (RWAs), and bridged assets, prices ETH at a fair value of $4,918, according to ETHval.

Using Metcalfe’s Law, which states that the value of a network grows in proportion to the square of real active users or the number of nodes in the network, projects an ETH price of $9,484, meaning the asset is over 211% undervalued, according to the model.

Valuing ETH through the Layer-2 (L2) framework, which accounts for the total value locked (TVL) in Ethereum’s layer-2 scaling network ecosystem, projects a price of $4,633 per ETH, meaning that ETH is about 52% undervalued.

The Ethereum community and analysts continue to debate how to value the world’s first smart contract platform properly, with many saying that traditional valuation models are not sufficient to value nascent digital assets and decentralized blockchain networks.

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Despite the mostly rosy outlook, one valuation model says ETH is grossly overvalued

The Revenue Yield valuation model, which values ETH by the annual revenue generated by the network, divided by the staking yield on ETH, says that ETH at current prices of over $3,000 is overvalued by over 57%.

Revenue Yield is the most reliable valuation model for accurately pricing ETH, according to ETHval’s criteria and methodology.

ETH should carry a price tag of about $1,296, according to the model, highlighting the Ethereum network’s dwindling revenue generation as fees reach record lows and competing networks absorb some of its market share.

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