Asset management leader VanEck has significantly lowered its long-term price forecast for Ethereum’s ETH token.
The changes come in a difficult year for Ethereum, which has underperformed major competitors such as Bitcoin and Solana despite the SEC's sudden approval of a Spot ETH ETF in May 2024. This revised forecast reflects the significant discrepancy between VanEck's original assumptions and actual network performance. In particular, how revenue will be distributed between Ethereum's main network and its scaling solutions.
According to VanEck's original model, Ethereum was supposed to earn up to 90% of its layer 2 revenue through various types of fees, including blob fees, proof fees, and call data fees. According to recent data, only about 10% has been accumulated on Ethereum in the past four months, dramatically impacting the economic model of the network.
The Dencun upgrade made the problem even worse. The Dencun upgrade inadvertently created an environment where layer 2 chains could become entrenched in the main network at minimal cost. This development resulted in what many observers described as excessive value extraction from layer 1, while simultaneously reducing ETH burn and pushing the asset into an inflationary state.
Looking ahead, VanEck analysts point to several potential solutions that could rebalance incentives between layer 1 and layer 2 chains. These include base sequencers with ETH holding requirements, providing layer 2 chains with additional rewards that return more value to the main chain, and creating ETH collateral requirements for using BLOBs. Masu.
Siegel pointed to EIP 7781 as one promising development that could help with rebalancing. This will provide fast finality for rollups based on Ethereum's mainnet and sequencers.
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