How to value the modular blockchain leader Celestia?

Original Title: Getting Close to Celestia: How to Value the Leader in Modular Blockchains

Original Author: WAGMi Ventures

Recently, the modular blockchain Celestia announced an airdrop plan, intending to distribute 60 million Celestia tokens (TIA) to 7,579 developers and 576,653 active on-chain addresses. This airdrop accounts for 6% of the total supply of Celestia tokens.

The valuation is calculated based on Celestia's market-to-sales ratio model, assuming that layer 2 networks pay Celestia for data availability at a rate of $25 per MB and achieve twice the data availability adoption of Ethereum on layer 2.

Value Capture of Celestia

Celestia is a foundational protocol that provides data availability, and its revenue comes from fees paid by layer 2 protocols for storing transaction receipts or proofs.

Currently, layer 2 protocols built on Ethereum write approximately 15,000 MB of data per month, averaging $700 per MB (Note: based on Ethereum priced at $1,600). According to Ethereum's upgrade roadmap, EIP-4844 will introduce a new, cheaper data storage field known as "blobs," reducing Ethereum's data availability costs by about 90%. This sets an upper limit on the unit revenue for DA.

For Celestia, based on its generated gas fee revenue, a valuation of $2.75 billion can be derived, with its storage cost per MB being around $10 to $25.

The vertical line represents different adoption levels of Celestia, presented as multiples of the current cumulative Ethereum Rollup data demand (15,000 MB is equivalent to 1 times Ethereum). The diagonal line shows the market-to-sales ratios of other foundational protocols, with the intersection reflecting Celestia's FDV valuation within the selected revenue levels and multiples range.

Like other L1 tokens (and to a lesser extent L2 tokens and L3 ecosystems), the value of the TIA token comes from current transaction demand (revenue) and all future expected transaction demand. As the adoption of the TIA token increases as a gas token in Rollups built on it, the token increasingly captures the value of future economic activity across the entire ecosystem, pushing the valuation range towards levels similar to emerging L1s like Solana, in addition to the DA-specific fee revenue of Celestia.

Customer Profile of Celestia

Financial businesses like DeFi tend to favor the Ethereum ecosystem for its high security and immense liquidity. Financial users have cash and have financial justifications for transactions (expected profits), and they are willing to pay reasonable fees for transactions.

In contrast, consumer businesses like social networks or games are backed by a large number of low-value transactions. The lower transaction fee requirements mean there is less revenue from transaction fees available to share with the DA layer.

Demand for Celestia's DA values its affordability and low cost, and initial Rollup customers will naturally seek lower transaction unit costs, such as consumer-focused applications or low-value financial applications.

Since the DA layer serves as the foundational security layer for the Rollups above it, the value of the DA layer must grow proportionally with the aggregated value of the maximum Rollup and its associated applications to maintain sufficient security levels.

Celestia is undoubtedly impressive technology, but the core challenge it faces will be proving whether an independent DA network has sufficient value capture to justify its long-term position in the market.