The Ethereum Layer 2 market is expected to reach a base case valuation of $1 trillion by 2030, according to investment firm VanEck. To arrive at this figure, the investment company applied a 25x free cash flow multiple to its expectations of future cash flows. They counted not only transaction fees in their revenue, but also maximum extractable value (MEV). How realistic do these estimates look?
The $1 trln forecast for the Ethereum L2 token market by 2030 looks optimistic but has a rational basis. Ethereum remains the leading platform for smart contracts, and the development of L2 solutions makes it possible to solve scalability problems. In addition to transaction fees, analysts factored in MEV, which holds significant potential.
The forecast also builds on the expected increase in industry use of public blockchains, such as in finance, gaming and the metaverse, where Ethereum and its L2 solutions could become key infrastructure.
Needless to say, there are risks and uncertainties associated with the emergence of new technologies or regulatory changes. But overall, $1 trln is a realistic upper bound for the valuation range of Ethereum L2 networks by 2030.