Analysis from RxR suggests that Ether is trading at a 27% discount to its fair value when user stats from its layer-2 platforms are included in Metcalfe’s law calculations.
- When it comes to the increasing attention being paid to digital assets, Bitcoin remains the primary point of focus as it was the first to launch and has the highest market capitalization of all cryptos, but Ether is gaining traction in the eyes of institutional investors as its number of active users has now surpassed that of Bitcoin.
RxR determined this fair value projection on an enhanced version of Metcalfe’s law, which includes the active user base on the Ethereum mainnet as well as its various L2s. More traditional Metcalfe law models typically only include the active user count on the mainnet. “We think modeling ETH’s network value should evolve as its network structure evolves,” Harland said. He noted that since April 2021, scaling networks like Polygon have been “contributing to Ethereum’s backspace at scale,” and have increased the total value locked on the Ethereum network.
With the growing popularity of Ethereum scaling solutions capable of servicing a wider set of use cases, Harland said they “see a reasonable chance of 200% growth in daily active users in 2024, implying a $800B fair network value by 2025 .”Harland noted that the number of active users within the Ethereum ecosystem surpassed that of Bitcoin in 2023, and said the “rate of active users on Ethereum has also consistently outpaced Bitcoin as a function of days since launched.
Gadit said that while the underlying case for a higher price of Ether is supported by the increase in active users on the mainnet and L2 networks, it will likely take an improvement in the macroeconomic environment for its price to see meaningful appreciation.
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