On October 4, 2024, Matthew Sigel, Head of Digital Asset Research at global investment firm VanEck, along with investment analysts Patrick Bush and Nathan Frankovitz, published the “September 2024 VanEck Crypto Monthly Recap.” Published a blog post titled , in which Sigel discussed Ethereum's recent poor performance. Compare with Bitcoin (BTC) and Solana (SOL). Siegel said ETH is up 14% year-to-date, lagging behind BTC (+49%) and SOL (+52%). According to Siegel, this underperformance is due to the implementation of EIP-4844 on March 13, 2024, which significantly changed Ethereum’s economic model.
Sigel explained that EIP-4844 created a new transaction layer for posting data to the Layer 2 (L2) blockchain at a low cost, reducing the demand for Ethereum block space. Siegel highlighted that L2 used to account for 20% of Ethereum's block space, but that demand has since evaporated, resulting in a drop in Ethereum's transaction price. Siegel said the changes will reduce Ethereum's annual revenue from $7.2 billion in March to $1.2 billion in September, and move ETH emissions from deflationary (-1.15%) to inflationary (+0.34%). revealed that something had changed.
According to Sigel, Ethereum adopted this model to expand blockspace capacity for mass adoption, a strategy similar to Solana's focus on low-cost blockspace. However, Siegel noted that short-term investors are losing confidence in ETH as a deflationary, dividend-paying asset due to the decline in the “take rate.” Siegel emphasized that EIP-4844 fundamentally changed Ethereum's business model, shifting Ethereum's role from generating revenue through transaction fees to an L2 payment and data availability layer.
Siegel outlined a long-term vision for Ethereum, which envisions L2 expanding to millions of users who pay with ETH and increasing the value of the asset. However, Siegel cautioned that the framework relies on L2 continuing to work with Ethereum, which is not guaranteed. He believes that if economic conditions change, the relationship between Ethereum and L2 could break, as L2 is closer to end users and may decide to move away from Ethereum to capture monetary value for themselves. I warned you that there is.
Siegel explained that blockchains such as Ethereum and Solana compete on three fronts: economic value of block space, liveness (ability to guarantee transactions), and safety (balanced security). did. Siegel pointed out that while Ethereum prioritizes availability and security and leaves economic value to L2, Solana focuses on maximizing the economic value of Layer 1 (L1). Sigel said that unlike Ethereum, which relies on intermediaries such as L2, Solana can scale transaction throughput and provide lower latency to serve a larger user base and connect users directly to SOL tokens. I emphasized that it is binding.
Despite Ethereum's struggles, Siegel suggested that Ethereum's censorship resistance and security still provide stronger property rights than Solana, making Ethereum a more secure and permissionless platform. Siegel said that Ethereum developers will be able to strengthen L2 collaboration by requiring ETH to be held for transaction ordering and by collateralizing ETH to use Ethereum's transaction layer. He said that economic value can be regained.
On October 17, 2024, Mr. Siegel further commented on the changing fundamentals of Ethereum on social media platform X. Siegel revealed that VanEck's $22,000 price target for ETH is for 2030, but the 2024 election prediction target is different. However, Siegel acknowledged that changes in Ethereum's fundamentals suggest that the valuation model needs updating.
Sigel said that in the original model, the Total Value Locked (TVL) was split 50:50 between Ethereum and L2, and the Maximum Extractable Value (MEV) was also split 50:50, with 0.10 per year of TVL. It was estimated that %. Siegel said this assumption has not changed and reflects current reality. However, Siegel pointed out that there are significant differences in the distribution of transaction revenue between Ethereum and L2. While the original model assumed a 90:10 split in favor of Ethereum, the actual split for the past four months has been 10:90 in favor of L2.
Siegel said this change shows that L2 is capturing significantly more value from Ethereum than originally expected. He further stated that if this 10:90 split holds, VanEck's ETH price target will fall by two-thirds.
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