Is ETH overvalued or not? Recently, the community has been discussing whether ETH is going to be in trouble. However, few people have recalculated the valuation of ETH based on the current fundamentals to see if it is reasonable. Let's try to shed some light on this. The value of ETH can be roughly divided into 5 parts: 1. Gas revenue. The current annual gas revenue is $548 million. If we calculate the price-to-sales (PS) ratio, it is 500. In comparison, SOL's PS ratio is around 300. Looking at this, ETH appears to be significantly overvalued. 2. The current annual value burned is $400 million. 3. The annual issuance is $2.22 billion. 4. After joining ETFs, ETH has gained certain commodity attributes and market capitalization. 5. The moat of the ETH ecosystem, including Layer2, DeFi, and the strongest developer community in the crypto space. Let's analyze: 1. The current low gas revenue is mainly due to Layer2 not paying gas fees. Layer2 is a clever and efficient way to use block space; it is ETH actively reducing its own revenue but increasing the moat of the ecosystem by offering an 80% discount on block space. On the surface, the PS ratio looks very poor. But this is actually ETH's choice to sacrifice short-term interests and sell block space at a discount to strengthen the ecosystem moat. From the Foundation's internal perspective, this choice is more beneficial than maintaining a low PS ratio. Therefore, ETH's true earning power is far from being reflected in the PS ratio. From the MC/Volume perspective, ETH is not priced at a premium compared to Visa. 2. Whether it's the cost of issuance or the revenue from burning, for long-term holders, it does not affect their overall interests. Therefore, burning and issuance do not have a significant impact on ETH's valuation. 3. How much is the commodity attribute worth? I found another commodity ETF: iPath Pure Beta Precious Metals ETN (BLNG), which has a market cap of only $2 billion. This means the ETF approval will not provide much of a boost, and the core is still the intrinsic value of the underlying asset. Although the ETF approval does psychologically increase ETH's market cap, conservatively, we can consider ETH's commodity value contribution as 0. 4. How much is the value of the ecosystem moat? Considering it together with the PS ratio means that ETH's willingness to offer discounts can support a higher PS ratio. The most complete ecosystem moat is the best asset to sell block space. 5. At this time, ETH is far from being overvalued as it appears. But there is still some overvaluation. The market expects on-chain activity to increase 2-3 times to justify the valuation based on cash flow. There is also a risk of the market losing patience. However, historically, once the market warms up, on-chain activity can increase 10 times or even dozens of times in a short period of time. With future rate cuts and balance sheet expansion, ETH can absorb the liquidity. At this time, ETH has some premium, which is understandable. Conclusion: The current price of ETH is reasonable, and there is no obvious overvaluation, but it is not very cost-effective at the moment. There is no need to panic.