Analytics company RxR published a new model for estimating the cost of the Ethereum network based on Metcalfe’s law. According to it, the native ETH blockchain token is trading at a 27% discount.
Recall that Metcalfe’s law implies that the utility of a network is proportional to half the square of the number of users. The mixed approach of RxR is different in that it takes into account users of not only Ethereum, but also L2 solutions.
According to the conclusions of RxR experts, a fair valuation of the Ethereum network is $275 billion. At the time of writing, the capitalization of the blockchain is $196 billion, according to CoinMarketCap.
The report found that traditional models based on Metcalfe’s Law only take into account users of the main network. The difference between these two forecasts can be seen in the graph:
Ethereum market capitalization change. The traditional model based on Metcalfe’s law is marked in blue, the mixed model is marked in red. Source: RxR.
According to RxR experts, these findings refute the thesis that Ethereum is overvalued.
At the time of writing, Ethereum is trading at $1,640. The rate dipped slightly after problems with the launch of the new Holesky test network, but quickly leveled off.
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