The valuation of blockchain tokens has always been a hot research issue in the crypto ecosystem.
Regarding the valuation of Bitcoin, there are many articles that have discussed the relationship between the price of the currency and the mining shutdown price. However, regarding Ethereum and even the broader blockchains based on the POS or DPOS consensus mechanism, although there are also many articles that discuss what factors are related to their tokens, there do not seem to be many logically convincing ones.
Let’s take Ethereum as an example. Many times, the method we use to estimate the (future) price of Ethereum is to simply compare it with the market value of Bitcoin.
This approach is not without basis, but I think it lacks consideration of the essence and characteristics of Ethereum, because the value acquisition of Ethereum is clearly different from that of Bitcoin.
For example, many people would say that Bitcoin is "digital gold" and Ethereum is "digital oil."
If these two are the difference between “gold” and “oil”, then can Ethereum’s valuation be simply compared to Bitcoin in the same way as above?
This is clearly inappropriate.
Recently, I read an article on Messari about the “economic security” of POS/DPOS blockchains.
The so-called "economic security" refers to the relationship between the value of tokens used for collateral in the POS/DPOS blockchain and the security of the blockchain.
For example, the current circulation of Ethereum is 100 million, of which one-third is used for POS collateral. If the current unit price of Ethereum is $3,000, then the value of Ethereum used for collateral is $100 billion. The "economic security" of the Ethereum blockchain is guaranteed by this $100 billion.
The core of this article is whether "economic security" is as important to the security of POS/DPOS blockchain as many people in the industry imagine.
This topic is not directly related to the valuation of Ethereum. However, one of the scenarios listed in the article makes me think about whether the method described in it can be used to value Ethereum or more broadly POS/DPOS blockchain tokens.
The author of the article assumes the following situation:
For example, I have 10 million USD of USDC, but the collateral value of the POS blockchain where my 10 million USD of USDC is located is only 100 USD. In this case, do I dare to put these USDC on this blockchain?
Definitely not.
Why?
Because if the total value of tokens pledged by all nodes is only $100, then the malicious actor can bribe these nodes with $1,000 (10 times the pledge value) and plunder 10 million USDC on the chain.
For these nodes, even if they cooperate with the perpetrators to commit evil and all of their pledged $100 tokens are confiscated, the $1,000 bribe they receive is tempting enough.
For the bad guys, the cost of $1,000 is negligible compared to the profit of 10 million USDC.
So although we may have disputes about how much "economic security" is worth to make people believe that this POS blockchain is safe, we can at least come to a bottom line:
The collateral value of this POS blockchain cannot be less than the total value of the assets on the chain.
Following this line of thought, let’s try to make a very conservative estimate of the unit price of Ethereum.
I checked the data on defillama (https://defillama.com/). As of the time of writing, the TVL on the Ethereum mainnet plus various second-layer extensions (OP-Rollup and ZK-Rollup) is about 70 billion US dollars.
The Ethereum Foundation, including Vitalik, estimates that one-third of the circulating Ethereum tokens (120 million) may be used as collateral in the future. If calculated based on today's Ethereum price ($3,200), the collateral value of one-third of the circulating tokens is approximately $128 billion.
So the current situation of Ethereum is that there is about $128 billion of "economic security" to ensure the security of a total of $70 billion in assets on the Ethereum mainnet and its second-layer expansion.
If we believe that the future crypto ecosystem will recreate an on-chain economy for human society, and assuming that the TVL of this future economy in the Ethereum ecosystem can roughly reach our country's foreign exchange reserves in 2023 (US$3.24 trillion), then the value of the tokens pledged in the Ethereum blockchain must be at least US$3.24 trillion.
If we are conservative and assume that this $3.24 trillion is the value of all Ethereum tokens in circulation, then the price per Ethereum token is approximately $27,000.
In this calculation process, the data and information I cited are entirely my own preferences. This is not the key point. The key point is that this valuation idea can roughly give us a valuation bottom line for blockchain ecosystem tokens.
In fact, it can not only be used to evaluate the future unit price floor of Ethereum, but also to evaluate the future unit price floor of any POS/DPOS blockchain token.
The reason I wrote about this somewhat "fantasy" valuation method today is purely because reading that article sparked some ideas and inspired me to think about the valuation issue from another perspective.
