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Does ethereum have a limited supply

Ethereum has successfully gained more popularity in recent years. After its launch in 2015, Ethereum had gradually become the people’s choice when it comes to DApp and new token creation. Back in 2017, during the peak of the ICO era, almost everybody rushed to launch their token with the help of Ethereum blockchain. The ICO craze had helped Ethereum to get the second position in the crypto rankings, above XRP, BCH, and other popular altcoins.

And due to its popularity, many crypto miners set their sight on Ethereum. Since 2016, Ethereum has become one of the most mined cryptocurrencies on the planet. However, many miners have been asking the same question “Does Ethereum have unlimited supply?” They ask such questions because they want to know the future of their mining revenues in the crypto mining industry. Unfortunately, there are no direct information on CoinMarketCap and several other coin tracking websites.

Ethereum Supply

In the event of Ethereum genesis block, there were 72 million of pre-mined ETHs, with 12 million of those ETHs went to the founding team and the rest 60 million was distributed to almost 9,000 accounts. Ethereum adopted the Proof-of-Work consensus algorithm where miners could mine new ETHs and support the network.

When this post was written (April 2020), there were around 110 million of ETHs thanks to the mining activities. The number on CoinMarketCap does not list any “max supply” because there simply isn’t. Unlike Bitcoin with a max supply of 21 million, Ethereum did not have any maximum supply to begin with. So, the answer to the question “Does Ethereum have unlimited supply?” is actually “Yes”. The supply of Ethereum is unlimited despite the current circulating supply is only around 110 million.

The Proposal And Ongoing Pressure To Set A Max Supply

That being said, there have been some ongoing pressures by the Ethereum community to change this “unlimited supply” rule. They believe Ethereum must follow Bitcoin’s maximum supply rule if it wants to be a long-term viable investment vehicle.

Vitalik Buterin, the founder of Ethereum himself, had proposed the changes to Ethereum’s maximum supply. He proposed a maximum supply of 144 million ETHs in his EIP (Ethereum Improvement Proposal). Previously, he proposed 120 million in his older EIP but the Ethereum community ignored his request, which is why currently Ethereum’s supply is still uncapped.

Why Ethereum’s Max Supply Is An Important Debate

With Ethereum 2.0 coming closer to the mainnet, it is actually important to understand why the debate for maximum supply must be concluded. Here is why. At the moment, Ethereum is still using the Proof-of-Work algorithm which is similar to how Bitcoin works. Solving mathematical problems to earn ETH needs expensive computer equipment with powerful CPUs.

As Ethereum tries to transition to Proof-of-Stake (PoS), a capped supply would actually help centralization issues by calibrating issuance at a variable rate. For your information, Proof-of-Stake is basically a mechanism where people can validate the blockchain transactions by staking more ETHs into the network.

Another important problem with maximum supply is inflation. With a definitive max supply, many miners (or validators in future PoS network) can mathematically calculate if it is worth to keep maintaining Ethereum network. This argument is basically about whether ETH can be a lucrative source of income for network supporters. Just like physical gold and Bitcoin, you have people who believe in the future valuation of a certain asset with capped supply (less supply and more demand = higher price).

With the combination of maximum supply and transition to PoS, it is widely believed that Ether price can gradually goes up.

Final Thoughts

A simple answer to your question – Ethereum supply is currently unlimited. However, there are legit proposals that want to cap Ethereum’s max supply. When Ethereum 2.0 is around the corner, it is highly probable that the Ethereum community would adopt the EIP to cap Ethereum max supply.

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