Ethereum has had a rollercoaster month, surging to its highest price for over two years, and experiencing record high network fees. It all points to the premise that, as a capital asset, it is still way undervalued according to one analyst.

August saw Ethereum prices touch $480, which has been the highest they have been since May 2018. It also saw average transaction fees skyrocket to $15, which makes the network painful to use for all but the whales.

Ethereum as an Asset is Undervalued

Messari analyst Ryan Watkins has taken a different view of the situation, observing that Ethereum had a monumental month in terms of its monthly revenue versus its market capitalization.

At this point ETH is probably undervalued even just considering it purely as a capital asset.

Annualizing Ethereum’s last 30 day’s fees implies ETH trades at 20x earnings.

Remember ETH in PoS with have a claim on those fees. pic.twitter.com/N3L97kaAK7

— Ryan Watkins (@RyanWatkins_) September 8, 2020

The researcher added that this revenue from network fees will be divided amongst stakeholders once ETH 2.0 proof-of-stake is finally launched.

Bitinfocharts.com also reported that mining profitability surged to record levels in August, and as previously reported by CoinGape, that revenue surged to over $800k per hour at one point.

Naturally, the Bitcoin maximalists, such as Udi Wertheimer, could not resist responding with comments such as ‘fees are not earnings’ and ‘ETH 2.0 will reduce fees’. However, the fact remains that ETH miners had one of their best earning months ever, while those network fees, whatever they end up being, will be distributed to ETH stakers once the new Beacon Chain is launched.

It should be noted though that the surge in network fees correlated with the launch of DeFi food farming protocols, many of which had classic pump and dump patterns, driven by FOMO. Yam Finance and SushiSwap were pretty much directly responsible for the two big spikes in average transaction fees over the past month.

Ethereum Transaction Fees Back Down to Earth

Now that things have calmed down in the realms of DeFi yield farming, Ethereum fees have retreated to normal levels once again. According to Bitinfocharts.com, average transaction fees are currently down over 80% from those peak levels last month.

The current average transaction fee is around $2.65 which is much easier to swallow when making smaller transactions on the network.

Another solid on-chain metric for general network health is Ethereum’s hash rate, and this is also at a 21 month high of 240 TH/s according to the charts.

In terms of current prices, Ethereum is still correcting having fallen 30% from its 2020 high to today’s prices of $338. It could dip further but the long term prospects for ETH are still very solid.