Ether Trading at 27% Discount to Fair Value, New Research Shows


18 Sep 2023 6:53 AM

Research firm RxR's blended Metcalfe law-centric valuation model, incorporating active user adoption of layer 2 scaling networks, suggests ether should trade at a market value of $275 billion....

  • Ether (ETH), the native token of the Ethereum blockchain, is trading at a 27% discount to its fair value, according to analysis by RxR.
  • RxR's fair value projection is based on a blended version of the Metcalfe law, which includes the active user base on the Ethereum scaling networks and active users on the Ethereum mainnet.
  • Traditional Metcalfe law models tend to focus only on the active user base on the mainnet.
  • Ether's value proposition is closely tied to Ethereum's network usage.
  • The updated model, which factors in the active user base of Ethereum's scaling networks, puts ETH's valuation at $275 billion, assuming no further user growth.
  • Ether's market cap looks undervalued compared to RxR's ML Blended Model, which considers layer 2 networks and offchain solutions.
  • Layer 2 protocols have seen significant growth, with the total value locked increasing to over $9 billion in two years.
  • The incorporation of layer 2 activity is important in Metcalfe law fair value models.

The sentiment of the article is positive, highlighting the potential undervaluation of Ether and the importance of considering layer 2 activity in fair value models.

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You May Ask

What is the current discount at which Ether is trading compared to its fair value?What is RxR's fair value projection based on?How does the updated model factor in the active user base of Ethereum's scaling networks?What is the significance of layer 2 protocols in the Ethereum market?How has the total value locked in layer 2 protocols changed in the past two years?

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