Asset management leader VanEck has drastically cut down its long-term price estimate for Ethereum's ETH token.
Asset management leader VanEck has drastically cut down its long-term price estimate for Ethereum's ETH token, amid growing concerns about the cryptocurrency's network dynamics and economic model. The head of digital asset research at VanEck, Matthew Siegel, announced on Oct. 17 that his firm had cut its 2030 price target for ETH from $22,000 to roughly $7,300, a 67% drop compared to its prior forecast.
This change comes in a difficult year for Ethereum, which has underperformed major competitors such as Bitcoin and Solana despite the SEC’s surprise approval of spot ETH ETFs back in May 2024. This revised forecast reflects sharp discrepancies between VanEck's initial assumptions and actual network performance, especially regarding how revenue is distributed between Ethereum's main network and its scaling solutions.
According to VanEck's original model, Ethereum was supposed to capture up to 90% of layer 2 revenue through different types of fees: blob fees, proving fees, and call data fees. Recent data suggests only about 10% has accrued to Ethereum during the past four months, dramatically affecting the network's economic model.
Matters were made worse by the Dencun upgrade, which inadvertently created an environment in which layer 2 chains could settle on the main network with very minimal cost. This development has resulted in what many observers describe as excessive value extraction from layer 1, simultaneously reducing ETH burns and pushing the asset into an inflationary state.
Looking ahead, analysts at VanEck point to several possible solutions that could rebalance the incentives between layer 1 and layer 2 chains. These include base sequencers that have ETH holding requirements, providing additional rewards to layer 2 chains that give back more value to the main chain, and making ETH collateralization requirements for using blobs.
Siegel did note that one promising development that could help with the rebalancing was EIP 7781, which would offer faster finality for the Ethereum mainnet and rollups based on sequencers.
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