Thursday Newsletter

Explore the latest trends, gain valuable insights, and stay informed in the dynamic cryptocurrency ecosystem.

06 June 2024

The Ethereum ecosystem has experienced a massive surge in daily active users, with numbers skyrocketing nearly ninefold since 2020. Analysts from VanEck believe this growth trajectory will continue, driving Ether (ETH) to unprecedented heights.

In the first quarter of 2020, the Ethereum ecosystem, including top layer-2 solutions like Arbitrum and Polygon, averaged over 250,000 daily active users, primarily on the Ethereum layer-1 mainnet. By the first quarter of 2024, this figure soared to approximately 2.25 million daily active users, a remarkable increase nearly nine times greater. On June 4, Ethereum mainnet reported 378,000 active users, Polygon had 1.3 million, and other layer-2 networks like Optimism, Base, and zkSync collectively added around 1.5 million users.

The launches of Optimism in late 2021 and zkSync mainnet and Base in 2023 have significantly contributed to this growth. Although Ethereum’s mainnet user numbers might appear modest, they align with the strategic roadmap set by co-founder Vitalik Buterin. He emphasizes the role of layer-2 solutions in scaling Ethereum, comparing them to the sharding concept of the old Eth 2 plan and suggesting they will help cultivate various subcultures within the Ethereum ecosystem.

VanEck Forecasts Ethereum’s Continued Growth

Crypto ETF issuer VanEck has significantly raised its Ethereum price target, predicting ETH will reach $22,000 by 2030. In a recent blog post, VanEck‚Äôs head of digital assets research, Matthew Sigel, along with his colleagues, increased their 2030 forecast from $11,800 last year. They highlighted Ethereum’s revenue per user, surpassing most Web2 businesses, and its growing appeal among traditional financial market participants and Big Tech.

VanEck analysts anticipate that spot Ether ETFs will soon be approved for trading on U.S. stock exchanges, enabling financial advisors and institutional investors to hold ETH. This development is expected to enhance the pricing and liquidity advantages characteristic of ETFs. The analysts project a 2030 valuation for ETH based on a forecast of $66 billion in free cash flows generated by Ethereum and accruing to the ETH token.

Ethereum’s Fee Generation and Market Performance

Despite the lower user numbers compared to layer-2 networks, Ethereum remains a fee-generating powerhouse. Bankless co-founder Ryan Sean Adams pointed out that Ethereum’s fee generation is three times higher than the combined fees of top layer-2 networks and Solana, calling it a “modern miracle.” Layer-2 solutions benefit from Ethereum’s security and pay fees to settle transactions on the main chain.

According to CoinGecko, Ether is currently priced at $3,862, marking a 1.3% increase over the last 24 hours. The anticipated launch of spot Ether ETFs is expected to drive ETH to new all-time highs, although some caution that the inflows into these crypto ETFs may be significantly lower than those for Bitcoin ETFs.

As the Ethereum ecosystem continues to expand and attract more users, the future looks promising for ETH, with projections of substantial growth and increased adoption in the financial sector.