Ethereum

EIP 960: A proposal to limit the supply of Ether submitted by Vitalik

On April 1st, Vitalik Buterin submitted a Ethereum Improvement Proposal (EIP 960) to the Ethereum Github. The Proposal was to cap the supply of Ether to 120 million ETH. The current circulating supply is a little over 98.5 million ETH.

As per the current structure of issuance, the annual supply of ETH generated is upto 18 million ETH

The reasoning behind the submission was the inability of an unlimited supply to maintain economic stability for the Ethereum Platform. He also felt that with existing miners dominating the ETH already generated, the supply would go against the promotion of an egalitarian coin distribution. He came at the number 120 million ETH becasue it is 2x the amount of ETH sold in the crowdsale in 2014.

In the event that the EIP is implemented at a time when it s not possible to cap the supply of ETH to 120 million, then the supply should be capped to 144 million. This figure was arrived at considering it to be 2 times the generated amount including both the sale and the premines.

While it is great that Vitalik is looking at capping the total supply of ETH to make it as stable as possible and increase its power as a store of value, I am skeptical of his point about an ‘egalitarian coin distribution’. I feel it warrants a greater explanation from Vitalik as to what he means by that and how he intends to achieve it. It will be interesting to see the Ethereum community’s thoughts on it for without their approval, the EIP wont be integrated.

 


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Abhishek Ajit

Abhishek was the co-founder of Blockmanity, he has a background in finance and has a good understanding of Bitcoin and other Cryptocurrencies from an economic standpoint. He is passionate about research and fundamental analysis.

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