Ethereum Considered 58% ‘Undervalued’ Based on Intrinsic Metrics, According to Hashed CEO

Ethereum's current market price is significantly lower than its intrinsic value, as assessed by Hashed CEO Simon Kim and displayed on the ETHval valuation dashboard. The data reveals that while Ethereum is priced at $3,034.0, its Composite Fair Value is estimated at $4,777.5, indicating a potential upside of approximately 57.8%. The dashboard utilizes various models to conclude that Ethereum is undervalued, providing a transparent view of its intrinsic worth.

Key Takeaways

Ethereum is trading at $3,034.0, while its estimated intrinsic value is $4,777.5.
The dashboard labels Ethereum as “UNDERVALUED,” suggesting a potential price increase of 57.8%.
Eight valuation models are used to derive fairness, resulting in five buy, one hold, and two sell signals for ETH.
Different valuation methods yield varied results, with some models placing Ethereum as overvalued and others suggesting significant undervaluation.
The tool emphasizes that the outputs are for reference and debate, encouraging users to assess the models behind the valuations.

Ethereum price news

Understanding Ethereum's Fair Value Calculation

Simon Kim introduced the ETHval dashboard with the objective of enhancing discussions around Ethereum's true worth, moving beyond mere market sentiment. His goal is to prompt critical thinking on Ethereum's intrinsic value by employing eight different valuation models. The visibility of the models and their output reliability ratings allows users to explore the evaluation process comprehensively.

The dashboard breaks down each valuation method employed. One notable model is the TVL Multiple, which assesses Ethereum based on the total value locked in decentralized finance (DeFi). This model estimates Ethereum's fair value at $4,026.6, marking it as 32.7% undervalued (reliability: medium). In contrast, a more conservative model, the MC/TVL Fair Value mean-reversion model, places Ethereum's fair value at $3,453.1, only 13.8% above the current price, and categorizes it as “fair.”

Models that factor stronger network effects or cash flow projections appear more optimistic. For instance, the DCF (Staking) framework, which accounts for future staking rewards, values Ethereum at an impressive $9,101.9, indicating it is 200.0% undervalued. Additionally, a high-reliability application of Metcalfe’s Law, which correlates Ethereum’s value with the total value locked to the power of 1.5, estimates its worth at $9,585.9, implying it is 216.8% undervalued.

Another model that considers the Ethereum Layer 2 (L2) ecosystem, which includes the total value locked in major rollups, generates a fair value of $4,640.0, suggesting a 52.9% undervaluation, although this model’s reliability is considered low. Conversely, a Staking Scarcity model, which factors in liquid supply dynamics, values Ethereum at $3,538.2, showing it as 16.6% undervalued.

On the flip side, two income-based models yield results indicating Ethereum is overvalued. The P/E Ratio model assumes a 25× multiple on annualized protocol fees, arriving at a fair value of $957.4, thereby suggesting Ethereum is 68.4% overvalued. A similar conclusion comes from the Revenue Yield model, which calculates Ethereum's price from a target yield of 2.5%, suggesting a fair value of $1,531.8, which denotes an overvaluation of 49.5%.

Ethereum fair valuation Source: https://ethval.com/

The ETHval tool employs a weighting system to resolve these diverse valuations. High-reliability models are given a multiplier of 9, medium-reliability models 5, and low-reliability models 2, contributing to a composite fair value of $4,780.7. This combination, especially influenced by the optimistic DCF and Metcalfe models, leads to the conclusion that Ethereum is undervalued, even though other reputable frameworks indicate potential for downward adjustment.

While the dashboard does not advocate for specific investment decisions, it clarifies that the information is intended for reference only. By comparing the current ETH price of $3,034.0 with a fair-value range stretching from $957.4 on the lower end to $9,585.9 on the high end, Kim's dashboard quantifies a discussion that often relies on anecdotes and opinions—leaning towards the viewpoint that Ethereum is significantly undervalued at present.

As of press time, Ethereum is trading at $3,029.

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