As Ethereum transitions to a proof-of-stake consensus mechanism, users who hold ETH can participate in securing the network and earn rewards for their contributions. The report also highlights the store-of-value potential of ETH, suggesting that its proof-of-stake status could position it as a rival to US Treasury bills.
By considering these revenue streams, VanEck provides a comprehensive assessment of Ethereum’s potential earnings. MEV refers to the profit that miners or validators can extract from the ordering and inclusion of transactions in blocks. Transaction fees, paid by users for executing transactions on the Ethereum network, have been on the rise due to increased network activity. They analyze gas costs users pay to interact with smart contracts and determine the revenue breakdown between Ethereum and the businesses involved.įurthermore, the VanEck analysts recognize Ethereum’s transaction fees and MEV as significant revenue sources. To simplify the user experience, the authors consider a take rate on the business economic activity derived from blockchain deployment. The authors expect that 5% of finance, 20% of metaverse/media, and 10% of tech infrastructure activity will move on-chain. The report identifies finance, banking and payments, metaverse, social and gaming, and infrastructure as the main categories for Ethereum’s market capture. This assumption forms the foundation of their projections, as they estimate the percentage of economic activity across different business categories that will utilize or reside on public smart contract platforms like Ethereum.
VanEck’s analysts assume that Ethereum will capture a 70% market share among smart contract protocols. The report, authored by Matthew Sigel, head of digital assets research at VanEck, and Patrick Bush, senior investment analyst for digital assets, takes into account various factors such as transaction fees, Maximum Extractable Value (MEV), and the concept of “Security as a Service” to support its price prediction. The forecast is based on Ethereum’s projected annual revenue of $51 billion in that year. Global investment firm VanEck has released a report outlining its price prediction for Ethereum (ETH), stating that the cryptocurrency could potentially reach a price of $11,800 by 2030.
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