What is the reasonable price of ETH? The eight major valuation models from venture capital point to $4800, which is still undervalued by sixty percent.

What is the reasonable price of Ether coin (ETH)? This question is particularly critical at a time when the L2 ecosystem is maturing and on-chain activities are reaching record levels. With the ETH price retreating from its highs and struggling to reach new peaks, discussions in the market about whether ETH is undervalued have been reignited.

The founder of the crypto venture capital firm Hashed, Simon Kim, publicly released a set of ETH valuation dashboards constructed from 8 traditional financial and network science models, estimating that the reasonable price of ETH is around $4,800, which is 57% higher than the current market price. This analysis reveals the true sources of Ethereum's value and reflects that the market's pricing of ETH may have lagged behind the actual development of the network.

(From an economic value perspective, Ethereum: Bitcoin has overcome early skepticism to become digital gold, now it's ETH's turn)

How much is ETH worth? The comprehensive valuation model gives the answer: $4,800

Simon Kim views ETH as a composite asset that possesses characteristics such as “cash flow, network effects, asset scarcity, and DeFi usage rate.” He conducts reverse valuation using 8 different perspectives, combining traditional finance and the cryptocurrency domain.

These models include TVL multiples, MC/TVL mean reversion, staking scarcity, L2 ecosystem value, income price-to-earnings ratio (P/E), discounted cash flow (DCF), and Metcalfe's law, among others.

After comprehensive weighting, the reasonable valuation of ETH falls at $4,804, compared to the current price of $3,051, indicating that ETH is still undervalued by 57.5%. Among the 8 models, 5 signal “undervalued” and 2 show “overvalued”, indicating that the overall trend remains positive.

Starting from DeFi and TVL: on-chain indicators show strengthening fundamental demand for ETH

From the perspectives of TVL, on-chain activities, and L2 ecosystems, the fundamentals of ETH have not weakened with the price drop, but rather continue to strengthen.

TVL: 69.7 billion USD, annual increase of 4.8%

L2 TVL: 12 billion USD, showing a high volatility trend.

ETH + L2 daily transaction count (Tx): 13.8 million transactions, year-on-year increase of 253%

Active addresses: 460, annual increase 253%

Stablecoin market capitalization: $166 billion, an annual increase of 55%

At the same time, the trading volume, active users, and on-chain demand of ETH continue to grow, reflecting that Ethereum is still not neglected while becoming the largest on-chain financial foundation in the world.

These indicators support Simon's argument that “ETH should be more valuable” in models such as TVL multiples, MC/TVL, and L2 ecosystems.

The scarcity of staking and supply contraction: The argument of ETH as a “yield-bearing asset” is further strengthened.

After ETH transitioned to Proof of Stake (PoS), the supply structure is drastically different:

The staked amount has exceeded 32 million ETH, accounting for approximately 26.5% of the total.

The transaction fee burning continues to reduce the circulating Ether.

The exchange reserves have fallen to 18.4 million ETH, a year-on-year decrease of nearly 8%.

This makes “Staking Scarcity (” and “DCF )” models exhibit significant upward adjustment potential, with the former receiving a low reliability rating from Simon and the latter a medium reliability.

DCF treats staking rewards as perpetual cash flow, estimating the reasonable price of ETH to be as high as $9,153, indicating that the market is far from realizing the characteristics of ETH as a “yield-generating asset.”

In other words, ETH is not just fuel or an L1 coin, but an asset that “generates cash flow and has a continuously decreasing circulation,” with its scarcity clearly increasing.

The revenue model is the most pessimistic, but L2 flow diversion is a normal phenomenon.

Among the total of 8 models, 2 showed negative, which means overestimation signals:

P/E ratio ( 25 times P/E ): Fair value is only 956 dollars, with high reliability.

Revenue Yield (: The fair value is only $1,529, with high reliability.

Both models use Ethereum's current “transaction fee revenue” as the basis for valuation. The former views Ethereum as a “growth tech stock” and assigns a price-to-earnings ratio of 25, while the latter considers it as a “yield bond.”

However, the author believes that as L2 rollups take on transaction loads on a large scale, Ethereum's value capture and Gas revenue gradually shift from L1 income to the overall network effect, which also explains why Ethereum's revenue appears to be unable to support its huge market value.

Due to ETH being widely integrated into the L2 ecosystem ) including collateral assets, the activity of L2 should also theoretically boost the long-term value of ETH.

(Ethereum L2 is going to revert to “a single chain”? EIL aims to create a seamless multi-chain experience )

Model Consensus: ETH price is being undervalued, but can the market reflect its true value?

Simon Kim's valuation model provides an important perspective: “The value of ETH has never just been network fuel, but the core asset of the entire on-chain economy.”

Against the backdrop of comprehensive growth in L2, DeFi, stablecoins, and staking economies, the market currently seems to still underestimate the network value, scarcity, and role of ETH in the new financial infrastructure.

As global finance gradually adopts tokenized assets and on-chain settlement structures, if Ethereum is fortunate enough to become its backbone, then the price trend of ETH will one day be repriced by the market to a reasonable valuation.

What is the reasonable price of ETH in this article? The 8 major valuation models from venture capital point to $4800, still undervalued by 60%. Originally appeared in Chain News ABMedia.