Summary Ethereum remains the leading settlement layer for high-value on-chain activity, with fees, burn, and staking supporting long-term value growth. Rollups, stablecoins, and real-world assets continue consolidating on Ethereum, expanding network demand and reinforcing its competitive moat. Staking-enabled ETFs and the Fusaka upgrade provide major catalysts that strengthen Ethereum’s long-term outlook. My valuation model indicates meaningful upside, with a base-case value near $5,000 and a bull-case value near $14,000 by 2030. Investment Thesis I assign Ethereum ( ETH-USD ) a buy rating because it is the leading settlement layer for high-value, on-chain financial activity that has its fees, burn, and staking tying its network usage directly to its native token, ETH, thereby increasing ETH's fair value over the long term. Ethereum also has a strong competitive moat amongst its faster, more centralized L1 rivals, such as Solana ( SOL-USD ) and Avalanche ( AVAX-USD ), because Ethereum is decentralized, has validator diversity, and has greater liquidity depth. And Ethereum's Merge has also strengthened its moat, considering that it has reduced its net supply and has linked its network security to real economic activity as opposed to having an inflationary model, such as Polkadot's ( DOT-USD ), that must continue to print tokens to maintain its security. With rollups, stablecoins, and real-world assets increasingly continuing to settle on the Ethereum network, its economic footprint continues to expand, and, over the next five years, staking-enabled ETFs and the upcoming Fusaka upgrade give the network two important catalysts that reinforce my long-term valuation given below. The Long-Term Case for Ethereum Economic Role Ethereum currently serves as the digital foundation for where trades, loans, asset transfers, and the like are finalized through code as opposed to going through banks or clearinghouses, which, in turn, produces fees and, ultimately, drives the burn in ETH that drives up ETH's long-term value. For example, any time there is a trade made on Uniswap ( UNI-USD ), or collateral is posted on Aave ( AAVE-USD ), or someone moves USCoin ( USDC-USD ), or a rollup (discussed further in its own section below) settles a batch of transactions, Ethereum records the final transactions while all of this activity produces fees that are paid in ETH, produces burn in ETH that reduces total supply, and produces staking rewards for validators (i.e., independent computers verifying and securing transactions). While all this may sound basic, none can be left out because it is this economic model that ultimately matters for my valuation methodology given below. Competitive Advantage All this economic activity stays anchored on the Ethereum network because decentralization provides an advantage that centralized platforms simply do not have. Take a cloud provider such as Amazon (AMZN), for example; such a provider could freeze accounts, change fees, or modify their system's rules at any time, whereas Ethereum cannot due to the thousands of independent validators enforcing rules by staking their ETH as financial collateral, thereby making the system resistant to any kind of interference. And when serious money is involved, such as in large transfers, collateralized loans, or institutional flows that are reliant on a settlement layer enforced by code as opposed to a single operator, this guarantees a competitive advantage over that of other cryptoassets (which I discuss further below). Economics Following the Merge Since Ethereum's merge from proof-of-work to proof-of-stake, Ethereum's design ties its usage directly to ETH, since, as mentioned above, validators must stake their ETH as financial collateral to secure the network, and its users must pay fees in ETH. And under EIP-1559 , every part of a transaction fee must be permanently destroyed. Thus, the more apps that run on Ethereum, the more ETH is needed to stake for security, and the more ETH is burned from fees, which, therefore, leaves fewer coins in circulation. This produces a two-fold result: First, we have a more secure network, and second, we have a tightening effective float—all of this differing from high-inflation blockchains, such as Polkadot , that must continue to print tokens to maintain its security. A Proven, Long-Term Track Record Ethereum also has a long track record to reinforce its position, since it has operated for slightly over a decade and has weathered events such as the famous DAO hack , multiple fee-market upgrades such as EIP-1559 mentioned above, and, of course, the Merge . Yet it still retains a deep pool of developers and the largest base of on-chain liquidity. There are other competing L1s that offer higher transaction speeds, such as Solana , for example, that regularly process around 3,000 to 4,000 TPS (transactions per second) in comparison to Ethereum's current real-time 15.74 TPS , and that can even handle a theoretical maximum of 65,000 TPS, but it lacks Ethereum's history, tooling, and user base. As a matter of fact, most DeFi , NFT , institutional on-chain activity, and the majority of stablecoins (e.g., Tether [ USDT-USD ], Circle Internet Group [ CRCL ], and Coinbase's [NASDAQ: COIN ] USDC) use Ethereum as their settlement layer. Rollups Meanwhile, L2 rollups, such as Arbitrum and Optimism , for example, compete with each other (and alternative L1s) for users, developers, and total value locked [TVL], but they ultimately settle their activity on Ethereum, thereby paying fees in ETH. Essentially, this makes them function as demand funnels for Ethereum because more rollup activity means more ETH burned, more ETH staked, and, thus, more demand for the Ethereum network. And, for valuation purposes, this is key because Ethereum is now the settlement layer behind what is a growing stack of financial applications and L2 networks—with ETH being the asset that secures, powers, and monetizes the entire system. Network Strength and Real-World Use Ethereum's network currently processes more economic value than any other smart-contract chain, with over 63% of all protocols and volume activity in DeFi, $78.1 billion in TVL—a 70% increase YoY, mind you—and the most dominant blockchain for startups that powers 36% of all coin-based projects; and all of this economic strength shows up across its fees, burn, staking participation, L2 settlement volume, and stablecoin flows. However, it is worth mentioning that Ethereum L1 revenue has declined since 2024, especially when blockchains such as Solana are generating higher monthly protocol revenue (something that I will address when I write on Solana next week). Still, to me, this is more so a reflection of Ethereum's design, where L1 is meant to function as that of a high-security settlement layer, with more high-volume activity taking place in L2; but, at the end of the day, if you combine L1 settlement with rollup fees, data submissions, proof generation, and so on, Ethereum accrues the largest economic footprint , with Solana coming in at second. Staking Participation Ethereum's staking participation remains one of its network's core strengths, and the proof is in the numbers. As of September 2025 , there were over 35.6 million ETH (i.e., 29.4% of all total supply and worth more than $150 billion) locked in staking contracts. This means two things: First, it means that there's less circulating supply (another important factor in my valuation method below), and, second, it supports one of the largest security budgets in the crypto ecosystem. Validators, for example, earn rewards from consensus issuance, priority fees, MEV flows, and so on, with validator yields that generally run in the 3-5% range . But what's important to note is that this dynamic reinforces the Ethereum network's sustainability because it's rewarding validators with fees from real activity as opposed to heavy token inflation, such as the previously mentioned Polkadot—and this sets it apart from many competing L1s and warrants a discussion of how Ethereum fares against its competitors. Ethereum's Competitors Below is a snapshot of both of Ethereum's primary L1 competitors, both of which are major blockchains and each of which offers different architectures and different economic models. My goal for this section is not to evaluate each chain, necessarily, but to simply explain Ethereum's competitive moat against them and explain where any competitive pressure currently exists. Solana Solana is Ethereum's strongest technical rival for apps that require both high throughput and low transaction costs. I've already stated above that Solana handles transactions at much higher speeds, but it also does so at a lower cost, with each transaction costing $0.00026 on average in contrast to Ethereum's $0.30. And both Solana's user activity and ecosystem are on the rise , with developer activity seeing a 29.1% annual growth rate—with a whopping 61.7% increase over the past two years. Nevertheless, Solana has a significantly smaller set of validators , with Ethereum boasting well over one million while Solana has somewhere between 2,000 and 3,000, one of the major factors being that the hardware requirements for running a validator on Solana are substantially higher. The Solana network also has a shorter operational history and has faced reliability issues, such as its history with network outages that I touched on in my XRP article . In that same XRP article, and it's worth mentioning again, I also touched on the fact that Solana trades decentralization for performance since, as of April 2025 , the top 100 validators on the Solana network controlled over 50% of its entire stake. Now, this doesn't necessarily prevent institutional adoption (admittedly, I thought this was the case at first), but the conclusion I have come to is that it gives Solana a different L1 settlement profile from that of Ethereum; what I mean by that is that while Solana excels with consumer-facing apps and high-frequency environments, such as high-frequency trading or real-time gaming, for example, Ethereum is the preferred base layer for apps that require liquidity depth, a broader validator diversity, and long-term, more credible (in a historical sense) neutrality, the result being that it has more institutional attention , and therein lies its competitive moat over Solana. Avalanche Avalanche is Ethereum's most interesting rival (at least it is to me) because not only did it emerge from the "ETH killer" era, but it competes through a modular architecture (i.e., the blockchain's core functions are separated into subnets, or specialized, independent layers [making them, in effect, L1 blockchains] that can be scaled and customized separate from other segments that all operate parallel to the broader network). Each subnet can then define its own validator to secure its subnet, customize its own native gas token, select a custom fee model, tune block times, and so on. To give a concrete example, an enterprise, such as a gaming studio, could require its validators to have advanced computing software in order to avoid high network latency—all of this dependent on Avalanche's consensus engine. As innovative as Avalanche is, there are, of course, trade-offs when comparing it to a network such as Ethereum's. One major trade-off, for example, is liquidity fragmentation : In the Avalanche network, liquidity becomes fragmented across isolated environments instead of one deep pool, such as Ethereum's, where stablecoins, DeFi protocols, and collateral markets are already sharing the same base for liquidity. And because assets cannot move safely between the blockchains without risky bridges that, to date, have been hacked for more than $2.8 billion , this puts Avalanche subnets in a position to continually attract liquidity from scratch and, therefore, may never overcome the liquidity advantage of Ethereum's ecosystem. A second trade-off is an obvious one: the ecosystem itself . Avalanche's ecosystem is less developed, has a lower TVL, and has less developer activity. And, finally, a third and more important trade-off—the one that arguably benefits Ethereum the most in terms of having a competitive moat—is that Avalanche's current scale does not threaten Ethereum's position as the primary L1 settlement base for high-value, on-chain finance , and, therefore, Ethereum receives more institutional attention than Avalanche. Tokenomics Recap Before moving on to valuation, I think it's important to just, very briefly, summarize the three mechanisms, all of which have already been mentioned above in greater detail, that drive ETH's long-term pricing and value. First, ETH is the mandatory blockspace fuel on the network, meaning that all settlement on the Ethereum network requires ETH. Second, staking has removed almost one-third of the total supply from circulation, thereby tightening the effective float. And, third, EIP-1559 permanently destroys a portion of ETH with every transaction fee, which, in turn, causes a net supply decrease during periods of high network usage. Valuation Methodology To value Ethereum, I will be using the same valuation methodology I used to value Bitcoin and XRP . This methodology is based on the quantity theory of money and adapted for cryptoassets, which assumes that a cryptoasset's value comes from the amount of economic activity it supports relative to how frequently the currency circulates. In this case: We divide an estimate of Ethereum's long-term settlement volume [T] by its velocity [V]—how many times each ETH is used per year—to get us our market cap [MV]. Dividing the market cap [MV] by the circulating supply [B] gets us our price per ETH. We apply a 30% discount to adjust for risks such as regulatory risks, L2 migration risk, execution risk, competition from other L1s, and so forth—all of which I addressed in my thesis risks section below. Ethereum's Valuation Settlement Volume As of the current data from which these assumptions are derived, Ethereum's daily transaction value averages $11.7 billion, which, when multiplied by 365 (i.e., the days in a year), gets us an estimated $4.27 trillion annualized L1 settlement volume. However, we must also include the modest L2 batch transactions that pay fees in ETH, which I will assume brings our annualized settlement volume to an approximate $4.5 trillion. Thus, I'll model a conservative 6-9% growth for both combined L1 and L2 settlement that gives us the following estimates: Bull Case: $25 trillion Base Case: $16 trillion Bear Case: $9 trillion Velocity If we simply divide Ethereum's annual settlement of $4.27 trillion by its current market cap of $361 billion, we get a raw velocity of 11.83. This is in line with CryptoQuant's reported velocity of around 10. Thus, I will keep this velocity for our bull case, considering this lower velocity range has brought Ethereum a 487% price rise in the last five years, and use a faster velocity for our bear case, given that it would decrease Ethereum's value and reflect bearish sentiment: Bull Case: 11.4 Base Case: 19 Bear Case: 20.2 Data by YCharts Supply YCharts shows ETH's current supply to be stabilized at around 117.77 million. Thus, I will keep the circulating supply number at a rounded 118 for our base case, taking into consideration higher network usage, ETH burn, and lower supply for our bull case, and an increasing circulating supply for our bear case. Bull Case: 110 million Base Case: 118 million Bear Case: 125 million Data by YCharts The Final Price Targets With all these assumptions priced in, we get final price targets of $14,000 in our bull case, representing 367% upside from ETH's current price of $3,000; a price target of $5,000 in our base case, representing 67% upside; and a price target of $2,500 in our bear case, representing -17% downside. In the last five years, Ethereum is up 490%, so my upside is slightly less than what Ethereum holders have been used to over the last five years. Ethereum Valuation Table (Author) Near-Term Catalysts for Upside There are two major catalysts for Ethereum's upside and next phase of growth that I believe merit mention: the first is the introduction of staking-enabled ETFs, and the second is the Ethereum network's most important technical upgrade to date. An Institutional Catalyst: Staking ETH ETFs The IRS has recently issued a safe-harbor ruling that allows U.S. crypto ETFs to stake ETH and other proof-of-stake digital assets without tax complications. Thus, fund managers will now be able to offer Ethereum products with staking yields of around 1.8% to 7% annually , and this is a huge catalyst for institutions. Take, for example, BlackRock's (NYSE: BLK ) spot Ethereum ETF (NASDAQ: ETHA ) that now manages more than $10 billion but does not stake ETH due to regulatory uncertainty; this could very well change since, last July, NASDAQ filed on BlackRock's behalf to allow the ETF to stake a portion of its ETH, with the final decision from the SEC coming around April 2026 . The Fusaka Upgrade Ethereum's Fusaka upgrade is scheduled to launch on December 3, 2025. This upgrade will optimize Ethereum's infrastructure, but it will also reduce rollup settlement costs on L2s, such as Arbitrum and Optimism, by 15-40%—sometimes even up to 60%. This will drive more rollup activity, increase ETH burn, and strengthen Ethereum's position as the main L1 settlement layer for real-world assets, with Ethereum's liquidity giving it a solid advantage since the 'vast majority ' of tokenized real-world assets—a market expected to grow to $2 trillion by 2028—will have their activity on the Ethereum network. Thesis Risks There are four major risks that limit Ethereum's upside going forward, some of which have been briefly mentioned already: The first risk is regulation. I’ve already mentioned that the final decision from the SEC will come around April 2026 regarding BlackRock's ability to stake a portion of its ETH. The effects of delays and restrictions regarding staking-enabled ETFs are two-fold: first, slower institutional adoption, and second, it keeps large pools of capital on the sidelines. The second risk is weakening long-term value due to more activity coming from the L2 ecosystem and, therefore, less revenue to the L1 network. As a matter of fact, Ethereum’s Dencun upgrade was an attempt to decrease Ethereum’s revenue by lowering the costs for L2s to operate on the Ethereum network in order to create a thriving L2 ecosystem. The strategic bet is that the fees L2s pay to the L1 will, within time, more than make up for the short-term loss of revenue. The third risk is, of course, competition. I’ve already mentioned Solana and its lower costs that take market share from Ethereum and make it attractive for those seeking a strong L1 for consumer apps, as well as Avalanche and its attractiveness for enterprises that are looking for customization. While Ethereum does have the aforementioned liquidity advantage, continuous outflows of developers seeking alternate L1s effectively erode its advantage. Last, Ethereum must execute its major upgrades without delays and, especially, without technical issues. Missed deadlines or unexpected bugs would, undoubtedly, reduce user confidence and increase its volatility in the short term. And all these possibilities, of course, were factored into my 30% discount rate above and explain why a target price lower than the base case is a very real possibility, though one that I would find surprising should it actually materialize. Investor Takeaway In sum, Ethereum continues to be the leading and strongest settlement layer for high-value, on-chain activity, with a strong advantage over its peers given its decentralization, liquidity depth, and validator diversity. Its expanding L2 ecosystem and its increasing real-world asset adoption continue to expand Ethereum’s economic footprint that, in combination with upcoming catalysts such as staking-enabled ETFs and the upcoming Fusaka upgrade, strengthen Ethereum’s long-term value and, thereby, give it a potential 367% upside by 2030 should all go well. Thus, I view Ethereum as a buy for any investor who is seeking a strong, fundamentals-based exposure to a leading smart-contract platform.
