Matthew Sigel, the Director of Digital Asset Research at VanEck, a major asset management firm in the United States, has adjusted the target price for Ethereum in 2030. He has lowered it by 67% from $22,000 to $7,334. The reason for this adjustment is that Layer 2 has been generating more transaction revenue from the Ethereum mainnet, accounting for 90% of the total.
The phenomenon of Layer 2 “sucking blood” from Ethereum has been widely discussed and seems to be impacting the future valuation of Ethereum. Matthew Sigel, the Director of Digital Asset Research at VanEck, has adjusted his price prediction for ETH in 2030.
He pointed out that if the distribution of transaction revenue between Ethereum and Layer 2 continues to be imbalanced, the target price for ETH in 2030 will be significantly reduced by 67% from the original $22,000.
The latest target price for ETH in 2030 is $7,334.
Sigel stated that with the changes in Ethereum’s fundamentals, he believes that the price prediction model for Ethereum should be updated.
Sigel maintains the assumption of a 50:50 distribution of Total Value Locked (TVL) between the Ethereum mainnet and Layer 2. Additionally, the model predicts that Miner Extractable Value (MEV) accounts for 0.10% of TVL annually, and this data remains unchanged as well, as these assumptions align with the current situation.
However, there has been a significant adjustment in the distribution of transaction revenue in the model. The original model assumed a 90:10 distribution of transaction revenue between Ethereum and Layer 2 (meaning Ethereum extracts 90% of the value from Layer 2’s blob fees, verification fees, and other fees). However, data from the past four months indicates that the actual distribution is 10:90, with Layer 2 receiving the majority of transaction revenue.
Regarding this change, Sigel pointed out:
Therefore, the latest target price for ETH in 2030 will be adjusted from $22,281 to $7,334.
VanEck adjusts ETH price prediction model
After the Dencun upgrade in mid-March introduced Blobs (EIP-4844), the cost of Ethereum Layer 2 significantly decreased, incentivizing a substantial increase in transaction volume and user count on Layer 2. However, this has led to a decrease in network activity on Ethereum Layer 1, resulting in a sharp decline in gas fees and revenue, challenging the narrative of ETH’s deflation.
Ultra Sound Money
Data indicates that in the past 30 days, Ethereum has only burned 566,000 ETH, lower than the newly minted 958,000 ETH, resulting in inflation of ETH’s supply by 0.325% over the past 30 days. From April until now, the supply of ETH has increased by 318,000 ETH.
While Sigel’s prediction shows a significant decline in the expected price of Ethereum, this reflects the current situation. It is expected that the Ethereum community will adjust the roadmap for ETH to reverse the trend of declining profitability. Vitalik Buterin, the co-founder of Ethereum, also acknowledges in his latest article that failing to further expand Ethereum itself could lead to a decline in ETH’s value, thereby affecting the long-term security of the network.
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