How much should ETH be worth? The 10 pricing methods proposed by Hashed all point to one conclusion

The weighted average price broke through $4,700, but the reality gap is huge. Source: Foresight News

The true value of Ethereum has been a subject of debate in the market. Unlike commodity assets like Bitcoin, which have clear valuation models, ETH as a smart contract platform should be able to form an accepted valuation system, but the Web3 industry has yet to reach a consensus.

Recently, Hashed published a study listing 10 widely recognized pricing models. Interestingly, 8 of them indicate that ETH is undervalued, with a weighted average valuation reaching as high as $4,700. Compared to the current price of $3,100, this figure is quite thought-provoking. So how are these models calculated?

From On-Chain Data to Yield: Three Levels of Credibility

Hashed categorizes these 10 methods into three groups, ranked from low to high credibility. Let’s first look at those valuation approaches that are more controversial.

Low Credibility Methods: Simple and Direct but Lacking Logic

TVL Multiple Method is the most straightforward—assuming ETH valuation should be a certain multiple of DeFi locked assets. Using the historical average ratio from 2020-2023 (about 7x), current TVL×7÷Supply yields $4,129, which is 37% higher than the current price. The problem is that it ignores complex liquidity cycle mechanisms and is too coarse.

Staking Scarcity Premium Method considers from another angle—the locked ETH cannot circulate, theoretically increasing scarcity. The formula is current price×√(Total Supply ÷ Circulating Supply), resulting in $3,528, 17% above the current price. However, this model has logical flaws: staked ETH will always be released, and liquidity replenishment is continuous.

Mainnet + L2 Overlay Method further expands the idea by including all L2 TVL, even giving double weight to ETH consumed by L2: (TVL + L2_TVL×2)×6 ÷ Supply, resulting in $4,733, 57% above the current price. This is still a variation of TVL and does not address the fundamental issue.

“Promise” Premium Method mixes ETH locked in staking and DeFi, constructing a complex coefficient, leading to a valuation of $5,098, 69% above the current price. Although it references the concept that L1 tokens should serve as currency rather than stocks, it still falls into the trap of always valuing above the current market.

These four low-credibility methods share a fatal flaw: unidimensional thinking and lack of self-consistency. Higher TVL is not necessarily better; sometimes, lower TVL with sufficient liquidity is preferable. Valuing locked assets as scarcity or loyalty fails to explain what happens when prices truly reach expectations.

Medium Credibility Methods: Historical Data and Academic Support

Capital/TVL Regression Method is essentially an mean reversion model—historically, the market capitalization to TVL ratio averages about 6x; deviations from this ratio indicate over- or undervaluation. The formula is current price×(6 ÷ Current Ratio), resulting in $3,541, 17% above the current price. This approach is more conservative, based on historical patterns rather than a single indicator.

Metcalfe’s Law approaches from the network effect perspective. Proposed by George Gilder and named after Robert Metcalfe, it states that network value equals the square of the number of nodes. Hashed uses TVL as a proxy for network activity, with the formula 2×(TVL / 1B)^1.5×1B ÷ Supply, yielding an astonishing $9,958, 232% above the current price. Although this model has academic validation (Alabi 2017, Peterson 2018), it still relies heavily on TVL.

Discounted Cash Flow (DCF) is the first to bring traditional finance logic into crypto—viewing ETH staking rewards as corporate income, calculating present value with a 10% discount rate and 3% perpetual growth. However, this formula has flaws; the reasonable price should be much lower, possibly around 37% of the current result.

Transaction Value Ratio Method is a reverse indicator—pricing based on annual transaction fees×25 (similar to high-growth tech stocks) ÷ Supply, resulting in only $1,286, which is 57% below the current price. This exposes a key issue: traditional valuation methods are not suitable for ETH, whether overestimating or underestimating.

On-Chain Total Asset Method seems absurd but has logic—Ethereum must protect these assets, so its market cap should match the total value of assets it carries. The simplest model (total on-chain assets ÷ supply) gives $4,924, 63% above the current price. Its basic assumption is questionable but hard to pinpoint specific issues.

Yield Bond Model is the only high-credibility method—annual income ÷ staking APR ÷ supply, resulting in $1,942, 37% below the current price. Traditional finance analysts treat crypto assets as alternative assets, essentially pricing ETH as a yield bond. This is a direct application of standard financial theory in crypto, again confirming that ETH is often “underestimated” by traditional methods.

The Truth Behind the Weighted Average

By weighting these 10 methods according to credibility, Hashed arrives at about $4,766. However, considering the issues with the DCF method, the actual figure might be lower.

Interestingly, these ten valuation approaches point to two opposing conclusions: either ETH is seriously undervalued (according to academic models and on-chain data), or it fundamentally should not be priced using traditional financial tools (according to the yield bond approach).

If I Were to Value ETH

The core might be the balance of supply and demand. Since ETH has real utility—whether paying Gas fees, buying NFTs, or providing liquidity—its valuation should be based on network activity levels. Establishing a quantifiable indicator to measure ETH supply and demand during specific periods, then comparing it with actual transaction costs and historical similar parameters, could help derive a reasonable range.

But the problem is: if network activity growth cannot keep pace with decreasing fees, ETH demand lacks strong support—that’s been the case over the past two years. Although Ethereum’s activity sometimes exceeds that of the 2021 bull market, the significant cost reductions have weakened demand, leading to supply exceeding demand.

The only unquantifiable aspect of this historical comparison method is Ethereum’s imagination premium. Perhaps at some point, when DeFi explodes again and enthusiasm rekindles, we will need to multiply by a “dream factor.”