Ethereum’s Users Soar; Price May Hit $22K by 2030

In A Nutshell

The Ethereum ecosystem has witnessed a significant increase in daily active users, growing nearly ninefold since 2020. This surge is attributed to the expanding layer 2 (L2) networks, including Arbitrum, Polygon, Optimism, Base, and zkSync, which have been developed to enhance the scalability of the Ethereum network. Despite the shift of user activity to these L2 networks, Ethereum’s foundational layer maintains its importance due to its security and fee generation capabilities. Additionally, VanEck, a prominent crypto ETF issuer, has revised its Ethereum price forecast, predicting that Ether (ETH) will reach $22,000 by 2030 based on projected growth in network usage and revenue generation capabilities.

Ethereum’s User Growth and L2 Expansion

Since the first quarter of 2020, the Ethereum ecosystem has seen its daily active users increase from an average of over 250,000 to around 2.25 million by the first quarter of 2024. This remarkable growth is largely due to the development and adoption of layer 2 solutions designed to scale the network and reduce transaction costs. Ethereum’s shift towards a “layered” architecture allows for a more efficient distribution of computational load, thereby accommodating more users and transactions.

The introduction and public access of new L2 networks such as Optimism, zkSync, and Base have contributed to this expansion, enabling a broader range of applications and use cases. While Ethereum’s mainnet user numbers have become a smaller fraction of the total, the network remains vital for its security and the settlement of transactions from L2s.

VanEck’s Bullish Ethereum Outlook

VanEck’s analysts, including the head of digital assets research, have recently updated their price target for Ethereum to $22,000 by 2030. This optimistic projection is based on Ethereum’s ability to generate revenue per user that surpasses many traditional Web2 businesses, alongside its growing appeal among financial and tech giants. The anticipation of spot Ether ETFs being approved for trading on U.S. stock exchanges has further fueled this bullish outlook. These ETFs are expected to provide investors with easier access to Ether while offering the benefits of ETFs, such as improved pricing and liquidity.

The projection is also supported by an analysis of Ethereum’s potential to generate $66 billion in free cash flows by 2030, which would accrite to the ETH token. This financial performance highlights Ethereum’s strength as a platform for decentralized applications and its role in the wider blockchain ecosystem.

Our Take

The exponential growth in Ethereum’s daily active users underscores the vibrant and expanding nature of its ecosystem. The development of layer 2 networks is a testament to the community’s commitment to innovation and scalability. While the transition towards a multi-layered architecture may dilute the dominance of Ethereum’s mainnet in terms of user numbers, it strengthens the network as a whole by enhancing its capacity and efficiency.

VanEck’s updated price target for Ethereum reflects a growing confidence in the network’s future, both as a technological platform and a financial asset. The approval of spot Ether ETFs could indeed be a pivotal moment, potentially unlocking new levels of investment and participation in the ecosystem.

As Ethereum continues to evolve and adapt, it stands as a central pillar in the blockchain and cryptocurrency landscape. With its robust development community and expanding use cases, Ethereum is well-positioned to reach new heights, both in terms of technology and market valuation.