Ethereum’s Vitalik Buterin proposed a 120 million hard cap on Ethereum’s native currency Ether and it’s no April Fools day joke. The founder suggests the cap could be part of the next hard fork, likely to be the first phase of the Casper update.
Ethereum Founder Suggests a Hard Cap on Coin Supply
Vitalik Buterin made the surprise announcement on the developer’s forum GitHub on Sunday, April 1, but what he proposed was not an April fool’s joke. In this latest Ethereum Improvement Proposal (EIP) Buterin recommends setting a hard cap on the coin at 120,204,432. This is exactly twice the amount sold in the original 2014 sale.
Buterin foresees the implantation of the hard cap occurring with the next phase of the Casper update. At the time all rewards in the sharding system would be redenominated to reflect the hard cap as a finite supply of Ether.
In his announcement, Buterin explained his reasons for suggesting the hard cap,
“In order to ensure the economic sustainability of the platform under the widest possible variety of circumstances, and in light of the fact that issuing new coins to proof of work miners is no longer an effective way of promoting an egalitarian coin distribution or any other significant policy goal, I propose that we agree on a hard cap for the total quantity of ETH.”
He goes on to say that if the EIP is adopted at a time when it is already too late to set a 120,000,000 hard cap then the next logical cap would be 144,052,828. That is exactly twice the amount of Ether sold in the genesis block.
There are currently 98 million plus ETH in circulation according to CoinMarketCap.
The Ethereum founder addressed miners concerns about diminishing rewards in the change to a proof-of-stake model which will be part of the Casper update. Explaining that if Ethereum stays with a proof-of-work model rewards will still decline gradually to the same point.
Buterin’s Statement Intended to Provide Clarity
Written in the terms of the original issuance up to 18 million ETH can be issued every year. Buterin’s statement in GitHub is one of the first times he has addressed Ethereums monetary policies in public in order to provide clarity and to “ensure the economic sustainability” as the platform adopts the new Casper algorithm.
The EIP was released as only a proposal. There was no timeline included in the statement nor any dates for the implementation of either the hard cap or the change over to Casper phase one.
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