The stable new supply (pictured above) of 20,000 eth, which applied for all of 2018, has now given way to an automatic reduction in new issuance as ethereum’s ice age has begun.
Ethereum’s difficulty bomb has gone into action around mid-December, with new issuance falling by 3,000 eth a day, circa $360,000, as of today.
It will keep going down somewhat slowly, but if it remains in place, then difficulty will rise exponentially to the point it is impossible to mine.
The last time this happened was in 2017 when the then 30,000 daily new eth gave way to a gradual reduction starting in March of that year.
Over a period of five months, ethereum’s new issuance fell to 15,000 a day in September 2017, effectively halved automatically, with block times reaching about 30 seconds at that point.
A decision was then made to delay the difficulty bomb while at the same time reducing block rewards from 5 eth to 3eth every 15 seconds or so. By the time this went live, however, new issuance rose to 20,000 eth in October 2017 from the previous month’s 15,000.
It has stayed at 20,000 since, until the last few weeks when the delayed difficulty bomb started kicking-in with the effect of automatically reducing new supply.
If no action is taken, then this may effectively halve new supply to 10,000 eth a day by May while doubling confirmation times to 30 seconds or so.
A March launch of a Beacon chain testnet has been suggested, with the Proof of Stake (PoS) chain potentially to launch by summer or autumn.
Arguably therefore the difficulty bomb can be maintained until then as its purpose is to prevent any miners’ sabotage ahead of PoS.
Metropolis devs, however, suggested last summer a reduction of issuance to 2 eth per block while delaying the difficulty bomb for another year.
The launch of Metropolis, however, has faced delays upon delays, with it now to require quite a bit more testing, a new mainnet block number, and so on, in a process that will probably take at least two months.
The end result would be an issuance reduction by 6,600 eth a day, barely 3,000 more than the current ice age reduction.
Calculating by how much the difficulty bomb itself would reduce new issuance, you’d think that in two months it would be a bit more than 6,600.
So there’s an argument to be made for Metropolis to be scrapped all together considering it appears to be bug ridden, at least until the Beacon chain launches.
Until then, the ice age can do its job of checkmating miners while adding some sense of urgency to the Beacon chain implementation.
Obviously we don’t want to rush anything, but having some sort of objective reason as to why one should work a bit harder (the ice age) does tend to make one work a bit harder.
The difficulty bomb can then be revisited during summer when we know better where the Beacon chain implementation stands.
Otherwise a delay of it, in light of recent events, may well guarantee a delay of PoS because it appears somewhat clear that miners are now interfering.
With the ethereum ecosystem having no card to play if the difficulty bomb is delayed, while miners would have huge incentives to delay PoS, then the implementation of the latter any time before the potentially delayed difficulty bomb starts hurting again in a year and a half would appear very unlikely you’d think.
That’s because, whether coincidentally or otherwise, then the difficulty bomb would be delayed precisely when the ice age would have reduced rewards to 2eth per 15 second blocks if such delay kicks-in in two months.
Meaning one can have reasonable suspicion the delays are all on purpose, albeit without evidence and probably without any intentional involvement by protocol devs.
The astonishing coincidence, however, does somewhat obviously suggest there is interference and sway by miners who may well be doing all they can to maximize eth rewards until they have no choice due to the difficulty bomb.
That would show a level of stupidity by miners on the one hand. That being, if they only care about fiat, then how many eth they get in a block is less relevant than how much that eth is worth.
On the other hand, however, it might show some clever long term planning if it is the case that they care about how much eth they get, regardless of its fiat value.
That’s because PoS is obviously based on eth ownership, so the more eth they get, the more sway the current miners might have in PoS.
Meaning the ecosystem needs to carefully consider as a network security matter whether there should be any delay of the difficulty bomb at all at least until summer when we’ll better know the state of PoS.