“In the foreseeable future, the supply will not go far above 100 million.” So said Vitalik Buterin, ethereum’s co-founder, at the beginning of last year.
At that time, there was some discussion about the inflation rate, with Buterin estimating ethereum’s supply at ◊95,912,556 as of November 2018.
Today, ethereum’s supply is at ◊101,481,699, precisely ◊5,569,143 more than estimated, or circa $1.5 billion at current prices.
Buterin said Block 5,500,000, when the supply would be at ◊101,212,556, would not be mined until more than a century from now during spring 2128. Ethereum’s current block number is 6,193,065.
“There is already an exponential slowdown in the growth of the ETH supply built into the protocol,” Buterin said at the time, but that slowdown, by which he presumably means the difficulty bomb, was changed in September 2017.
“It’s possible to agree that any delay to the ice age bomb should also respect this general ETH supply growth curve, so in a situation where at time X if current ethereum would have a 75s block time, the ice age patch would set the block time to 15s and the block reward to 1 ETH (and adjust uncle/nephew rewards proportionately).”
So said Buterin at the time, but it doesn’t look like the adjustment was quite in keeping with eth’s general supply growth curve.
That has instead kept growing, with more than ◊20,000 given to miners every day, translating to some $5.7 million a day or around $2.5 billion a year.
The reason for this significant difference between what was estimated and what turned out to be eth’s supply is probably because uncle rates (orphans) have doubled or more this year, with some suggesting miners intentionally try to increase uncle rates to gain higher rewards.
About a year ago, uncle rates were at 300 or so, translating to 1,000 eth a day. That went up 4x during the peak in January to 4,600 eth, and even now it stands at around 2,700 eth a day or about a million eth a year.
In addition, issuance wasn’t quite reduced in line with what it would have been had the difficulty bomb not been delayed, so explaining the other extra 4 million eth.
Discussions are currently on-going to reduce ethereum’s inflation rate from around 7.3% to circa 4.7%, bringing it roughly in line with bitcoin’s current inflation rate.
Some, however, want to reduce it further to just 1eth from the current 3eth, which would give eth a yearly inflation of about 2%.
A holders vote has been on-going for some time, with nearly 90,000 eth voting at the time of writing. 76% of them want issuance to be reduced to 1 eth per block.
The matter is to be discussed this Friday with developers asking miners to give their view. It looks like no one will be speaking in favor of one eth, but Afri Schoedon of Parity says:
“I’ll be around to champion 1234 this week,” with Ethereum Improvement Proposal (EIP) 1234 being a delay of the difficulty bomb and a reduction of issuance to 2 eth per block.
Some GPU miners are now saying they will support the proposal only if asics are forked off, but that might be a somewhat complex endeavor with considerable questions regarding security.
Where issuance is concerned, security would be a question too, with the answer there more difficult as it would depend on fiat price levels.