Ethereum (ETH) has long been the backbone of decentralized finance, smart contracts, and a thriving ecosystem of dApps. But here's a head-scratcher: despite trading at a price-to-sales (P/S) ratio north of 100x for years—a level that would make most traditional investors run for the hills—the number of ETH holders just keeps climbing. Is this a bubble waiting to pop, or proof that crypto natives are onto something with their valuation playbook?

If you're new to these terms, think of P/S ratio like this: it's the market cap of a project divided by its annual revenue (or "sales"). In stocks, anything above 10x often raises eyebrows; 100x? That's dot-com bubble territory. Yet ETH chugs along, defying gravity.

A recent insight from Token Terminal nails this paradox perfectly. They point out that unlike Cisco and other tech darlings from the late '90s, which saw their lofty valuations crash after a short hype cycle, Ethereum's metrics have stayed elevated for an extended stretch. And get this: holder numbers aren't dipping—they're surging. This isn't just passive accumulation; it's active conviction.

The Dot-Com Parallel That Doesn't Quite Fit

Remember the dot-com era? Companies like Cisco traded at insane multiples based on "eyeballs" and future promises, only to crater when reality hit. Token Terminal draws the line here: those valuations didn't last years. ETH, however? It's been in this high-P/S zone since at least 2021, weathering bear markets, upgrades like The Merge, and everything in between.

Why the staying power? Ethereum isn't just a speculative token—it's a utility beast. With layer-2 scaling solutions exploding (think Optimism, Arbitrum), gas fees dropping, and DeFi TVL (total value locked) rebounding, revenue streams from transaction fees and MEV (miner extractable value, now validator extractable) keep flowing. Holders aren't betting on hype; they're banking on network effects that compound over time.

Rising Holders: A Vote of Confidence in Alt Models

The real kicker? As ETH's P/S hovers in the stratosphere, unique addresses holding ETH are up—way up. Data from platforms like Etherscan shows millions more wallets stacking sats (well, ETH) since 2023. This isn't retail FOMO; institutions like BlackRock are dipping toes via ETFs, and whales are HODLing through volatility.

Token Terminal poses the million-dollar question: "A sign that these holders value ETH using an alternative model?" Absolutely. Traditional finance (TradFi) metrics like P/S or P/E (price-to-earnings, where ETH sits at a whopping 380x) assume finite growth and quick profitability. Crypto? It's about Metcalfe's Law—value scales with users squared—and infinite upside from global adoption.

Take Bitcoin as exhibit A: it has an infinite P/E because it "captures no revenue." Yet no one calls it overvalued; it's the digital gold standard. ETH, as the "world computer," layers programmable money on top. If P/E ratios keep climbing instead of normalizing, when do we ditch the old framework? In one year? Five? Ten?

As Token Terminal threads deeper, it echoes Kyle Samani's wisdom: most crypto debates boil down to "disagreements about time horizons." Without falsifiable timelines—like "if P/E doesn't drop in 5 years, rethink the model"—arguments stay stuck in echo chambers.

Rethinking Valuation for L1s: Time for a New Lens?

Layer-1 tokens like ETH, SOL, or even emerging memes with real utility (hey, we're Meme Insider after all) challenge TradFi orthodoxy. P/E might work for quarterly-earnings machines, but for protocols where revenue funds security, innovation, and composability? Nah.

Consider these alt metrics gaining traction:

• Network Value to Transactions (NVT) Ratio: Like a crypto P/E, but ties market cap to on-chain volume. ETH's been "undervalued" by this lately.
• TVL-to-Market Cap: Measures locked value against token price—ETH scores high here.
• Holder Growth Rate: Pure signal of conviction, as we're seeing now.

If you're a blockchain practitioner, this is gold. Tools like Dune Analytics let you track these yourself. Spotting sustained high multiples with growing adoption? That's your cue to zoom in—could be the next ETH moment for a meme token blending virality with real tech.

Wrapping Up: Patience Pays in Protocol Plays

Ethereum's saga reminds us: in crypto, "overvalued" is often just "early." As holders pile in, ignoring siren calls of traditional ratios, it's clear the market's forging its own rules. Will ETH's P/S ever "normalize"? Maybe. But if history's any guide, those betting against the network's resilience have been burned before.

What's your take—sticking with P/E, or ready for the crypto-native upgrade? Drop thoughts in the comments, and subscribe for more dives into meme tokens, tech news, and the knowledge base powering your blockchain edge.

At Meme Insider, we're all about demystifying the wild world of meme tokens while spotlighting the tech that lasts. Stay tuned.