Does ETH trade below it’s fair value?
Simon Kim, the CEO of Hashed, has created a new dashboard attempting to find the intrinsic value of the world’s largest altcoin using 12 different valuation methodologies.
They range from traditional finance frameworks, such as Discounted Cash Flow (DCF), Price-to-Sell (P/S) ratio, Revenue Yield, and Validator Economics, to more crypto-native metrics, such as Total Value Locked (TVL) Multiple, Market Cap to Total Value Locked (MC/TVL), Metcaife’s Law, Staking Scarcity, L2 Ecosystem, Commitment Premium, App Capital, and Settlement Layer.
Severely Undervalued?
According to Kim’s findings, the composite fair value of ETH should be $4,869 as of press time. Given its actual market price of just under $3,000, this means that the asset is undervalued by more than 62%.
A more detailed look into the specific numbers of each framework paints a clear picture. The model shows that ETH should be valued at $9,869 according to Metcalfe’s Law, which reads that the value of a certain network is proportional to the square of the number of connected users. The more the network grows, the more its value should increase exponentially, making it more valuable to each individual user.
The second-highest figure ($8,995) comes from the DCF (staking), which treats staking rewards as perpetual cash flows. It bridges traditional finance valuation with crypto-native yield generation. Validator Economics is next in line, showing a fair ETH value of $6,984. Settlement Layer and Commitment Premium also put Ether at over $5,000.
Who Said Overvalued?
In fact, only two of the 12 metrics show that ETH could be overvalued at current market prices. In legacy finance, the P/S ratio compares a company’s market value to its total sales over a period (usually 12 months). In crypto (or Ethereum in particular now), it works differently since there’s a network, not a company, to evaluate, and there are no sales.
For ETH, it compares the market cap to annual transaction fee revenue, and it shows that ETH’s fair value should be under $930. The Revenue Yield, which reverse-engineers fair value from live staking APR and treats ETH like a yield-bearing bond, also shows that the asset might be overvalued, with its price at $1,433.
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