Global investment firm VanEck has released a report outlining its price prediction for Ethereum (ETH), stating that the cryptocurrency could potentially reach a price of $11,800 by 2030. The forecast is based on Ethereum’s projected annual revenue of $51 billion in that year.

The report, authored by Matthew Sigel, head of digital assets research at VanEck, and Patrick Bush, senior investment analyst for digital assets, takes into account various factors such as transaction fees, Maximum Extractable Value (MEV), and the concept of “Security as a Service” to support its price prediction.

VanEck’s analysts assume that Ethereum will capture a 70% market share among smart contract protocols. This assumption forms the foundation of their projections, as they estimate the percentage of economic activity across different business categories that will utilize or reside on public smart contract platforms like Ethereum.

The report identifies finance, banking and payments, metaverse, social and gaming, and infrastructure as the main categories for Ethereum’s market capture. The authors expect that 5% of finance, 20% of metaverse/media, and 10% of tech infrastructure activity will move on-chain.

To simplify the user experience, the authors consider a take rate on the business economic activity derived from blockchain deployment. They analyze gas costs users pay to interact with smart contracts and determine the revenue breakdown between Ethereum and the businesses involved.

Furthermore, the VanEck analysts recognize Ethereum’s transaction fees and MEV as significant revenue sources. Transaction fees, paid by users for executing transactions on the Ethereum network, have been on the rise due to increased network activity. MEV refers to the profit that miners or validators can extract from the ordering and inclusion of transactions in blocks. By considering these revenue streams, VanEck provides a comprehensive assessment of Ethereum’s potential earnings.

The report also highlights the store-of-value potential of ETH, suggesting that its proof-of-stake status could position it as a rival to US Treasury bills. As Ethereum transitions to a proof-of-stake consensus mechanism, users who hold ETH can participate in securing the network and earn rewards for their contributions. This store-of-value aspect adds an additional layer of potential value to Ethereum beyond its utility as a smart contract platform.

One interesting concept introduced in the report is “Security as a Service” (SaaS). It emphasizes how ETH can be used both within the Ethereum ecosystem and beyond to secure applications, protocols, and ecosystems. By staking their ETH, holders can participate in securing the network and earn rewards based on various factors, including priority fees, tips, block-building fees, and ETH inflationary issuance. This concept highlights the value that ETH can provide as a security asset in the broader digital economy.

Based on their analysis, the VanEck analysts project Ethereum to achieve an annual revenue of $51 billion by April 30th, 2030, in a base case scenario. After deducting a 1% validator fee and a 15% global tax rate, they estimate a cash flow of $42.90 billion for the same period.

Using an FCF (free cash flow) multiple of 33x and considering the total token supply, the report concludes with a base case 2030 price target of $11,848 per ETH token.

It is important to note that any price prediction comes with inherent uncertainties. The cryptocurrency market is highly volatile and subject to various external factors that can influence prices. Factors such as regulatory developments, market sentiment, technological advancements, and macroeconomic conditions can all impact the price of Ethereum.

Nevertheless, VanEck’s analysis reflects the firm’s optimistic outlook on Ethereum’s revenue growth potential and its potential impact on the cryptocurrency’s price in the long term. As Ethereum continues to evolve and attract more users and developers to its platform, the potential for increased revenue and value appreciation becomes a compelling consideration for investors.