Ethereum had a pretty good last week. Although the global crypto market cap continues to fall, ETH has risen by 24.42% in the last 7 days. At the time of writing, its market cap was valued at $255.53 billion.
Will ETH market cap hit trillion dollars anytime soon? Probably not. The possibility of exponentially rising seems impossible at the moment. Celia Wan of Dragonfly Research thinks so too, and Celia Wan noted in her recent blog post.
According to our estimate above, it shows the total potential value of ETH in the distant future between $3.7 and $4.7 trillion.
What does the Ethereum Lindy effect mean?
The numbers may seem very distant right now, but ETH is thought to get there eventually. However, at this point it is worth considering that the Lindy effect is likely to do well for ETH as time goes on. The Lindy effect is the theory that explains that the probability of an entity surviving is directly proportional to its age. Wan’s blog noted:
Similar to BTC, ETH carries a very strong Lindy Effect as initial collateral in DeFi. If Ethereum and DeFi become the financial layer of the future, ETH can remain one of the major collaterals, ETH was the first collateral in the system and Defi was built on ETH.
Ether could have a greater advantage with the influence of DeFi platforms. Specifically, in June 2020, there was a total of $2 billion to $3 billion in weekly locked investment in DeFi platforms collectively. That number started to grow rapidly in August and is now consistently over $20 billion a week. At times, the value rose above $60 billion.
Throughout 2020, ETH has also performed quite well. ETH has consistently set new peak prices earlier this year. Notably, the value of ETH has increased by 854.31% in the last 365 days alone. By comparison, the growth of DeFi and the growth of Ethereum are interconnected. Noting the long-term effects on monetary value, Wan said:
If Ethereum and DeFi continue to grow, it is conceivable that ETH could take 10% of Bitcoin’s market share. If it captures Bitcoin’s potential market value of around $4.7 to $14.6 trillion, then ETH’s potential monetary value could be between $0.5 trillion and $1.5 trillion.
Ethereum’s 2.0 upgrade and transition to the PoS consensus mechanism will increase the security guarantee and reduce inflation. This will make ETH an even more attractive asset.
Pricing ETH like a capital asset gives the token a terminal value of $3.2 trillion over 10 years, using an above $60.2 billion dividend growth model.
As a result, ETH is different from other tokens in the market and will continue to be the best altcoin.