Limiting ETH's total supply

[Heisenberg_Hunter]

This had been a subject of controversy among the traders and investors on the hard cap of Ethereum. Unlike BTC which has a total supply of 21 million, Ethereum and Monero doesn't have one. But in the case of Ethereum, Vitalik proposed the EIP (Ethereum Improvement Proposal) in a way to cap the total supply at ~120 million. Since the cryptocurrency runs on the basis of network consensus and the people acceptance of the change, the EIP has never been accepted as of now nor they were tied to the code. But from Monero standpoint, once the supply hits the 18 million mark 0.3 XMR would be mined constantly per block thereby supporting the miners in the process.

There is a defined total/max supply was proposed by Vitalik but the consensus has never been approved till now. This does show that miners aren't really favorable to the idea nor does the public. Vitalik has proposed that if the total supply crosses his approx 120 million mark, the supply can be capped at 144 million again. Either of them were never really approved, so I don't think there would be a finite supply for Ethereum as of now. I am a Bitcoin, Ethereum and Monero maximalist and I have placed my trust on these three coins while the latter would prove to be perfect competitor for Bitcoin on a longer run.

Casper might change the way how we look Ethereum at the current phase and we would get introduced to a newer algorithm called Proof of Stake. Well, at some point of time in 2020 we would be experiencing this new protocol changes which could bring a development to the hard cap controversy.

[ATSgrowth]

Despite not having any max supply didn't they start reducing ETH's block reward ? The max supply is just like a time based switch since the rewards are automatically reduced once the specific block is mined. I think having no max supply is just fine for ethereum since there's always changes and the price is pretty stable regardless of the increasing supply. Putting a max supply might have a difference but I doubt it'll be big because it might take several years for the max supply to have an effect if it would be similar to eth classic.

Yes, also Ethereum experienced a "halving" but it is more secure for investors when they know that Ethereum is rare with limited supply and noone is able to print more Ether tokens into the ecosystem. 

[Abiky]

I do not understand why they chosen this economy model. As an inflation currency people would sell more than buy and hodl, same like current fiat money. Fiat money doesn´t have limited supply and constantly new money being printed into the system. And the result? American dollar has lost around 95% of its value over the past few years.

Exactly. Ethereum's current supply greatly resembles Fiat where every once in a while, new coins are "printed" by the issuer. Maybe developers have chosen Ethereum to be this way in order to reduce costs for interacting with smart contracts? I believe that a higher priced Ethereum would greatly limit the user's level of accessibility into decentralized applications. After all, a fee paid in ETH is required to use (or even deploy) a smart contract on the Blockchain. The classic version of Ethereum (ETC) might have successfully adopted a monetary policy, but that doesn't necessarily mean it'll work on Ethereum too.

By all means, the developers and the community will have the final decision on implementing a hard cap on ETH's supply or leave everything as is. As much as I'd love to use Ethereum as a store of value like Bitcoin, a reduction in supply doesn't seem to be feasible right now. What's important is to keep Ethereum as affordable as possible in order to attract people into decentralized applications. Otherwise, the high prices could scare away people in the mainstream world looking to use smart contracts for their own benefit.

Considering that Ethereum is the home of "decentralized finance" (De-Fi), it'd need to focus more on scalability instead of adopting a new monetary policy which would limit the coin's supply. As long as everyone can use Ethereum without hassles, there should be nothing to worry about.

Guys, you have to understand that price is not everything, higher price os ETH can be bad for smart contracts

You can read some info here: https://cryptobriefing.com/low-eth-price-ethereum/

So it's not all about the price for ETH, it's not a crypto used for payments

Thanks for sharing. I've figured that it's not suitable for ETH to reduce its supply over time, simply because prices will reach astronomical levels like Bitcoin. After that, it'll become extremely difficult for the average person to use decentralized applications for his/her own benefit. The unlimited supply in the ETH blockchain has been implemented by the developers for a very good reason. It's this "uniqueness" that separates Ethereum from Bitcoin and vice versa. As long as ETH is cheap to use, the world's second-largest cryptocurrency by market cap will be able to fulfil its vision of "banking for the unbanked".

Imagine each ETH being worth $20k just like Bitcoin was back in 2017. De-Fi apps like the Compound Protocol and InstaDapp would experience a decline in adoption because of the high fees in terms of USD. Even though Ethereum Classic has adopted a hard cap in supply, it still hasn't experienced an issue in adoption because prices per coin are much lower than Ethereum. But if ETC rises way above $2k per coin, you'd expect smart contracts to charge large amounts of money in terms of USD each time someone interacts with them. In the end, Ethereum will work best as a coin with an infinite supply and PoS for highly-performing and affordable smart contracts for the whole world to use. Just my thoughts

[Chukwunonso]

In my opinion, it may cause more harm than good, if the supply of ethereum is limited. Firstly, the purpose of ethereum is not to serve as a currency for the purchase of goods or services, rather it is to serve as gas for transactions and smart contracts on the platform. Most projects prefer using the ethereum platform because of the popularity and low gas price it offers. If the supply of ethereum is limited, it would lead to an increase in the value and people would prefer to hold than use it as gas. Even the projects may be unable to afford the gas fee for establishment of smart contracts and would have to look else where. Come to think of it, despite the fact that the supply of ethereum is not finite, the value could be said to be relatively stable and as such it could be a store for value for short to medium term.

[Abiky]

In my opinion, it may cause more harm than good, if the supply of ethereum is limited. Firstly, the purpose of ethereum is not to serve as a currency for the purchase of goods or services, rather it is to serve as gas for transactions and smart contracts on the platform. Most projects prefer using the ethereum platform because of the popularity and low gas price it offers. If the supply of ethereum is limited, it would lead to an increase in the value and people would prefer to hold than use it as gas. Even the projects may be unable to afford the gas fee for establishment of smart contracts and would have to look else where. Come to think of it, despite the fact that the supply of ethereum is not finite, the value could be said to be relatively stable and as such it could be a store for value for short to medium term.

I don't see this feasible for Ethereum since smart contracts require users to pay some ETH as "fuel" for their execution. It's best to have an unlimited supply to keep prices as low as possible in order to provide greater accessibility to the end user. While Ethereum Classic has adopted a monetary policy to implement a hard cap in supply, it's not as popular as Ethereum is. Which means, that prices have remained relatively low having no effect in smart contract adoption within the platform. Things would've been worse for ETC if it had higher prices than $2k per coin as fees in terms of USD will be ridiculously high. There's a reason why Ethereum developers made the platform with an infinite supply of coins. It's more of a feature instead of a bug.

But who knows? Everything will depend on how developers are willing to make Ethereum affordable enough for the use of decentralized applications on the Blockchain. If they decide to limit ETH's supply, they could adopt some sort of "dynamic fee" model for smart contract execution in order to avoid any negative consequences in its adoption. Remember, "when there's a will, there's a way". This is limited to the developers' own imagination. Whichever way the team decides to go forward, Ethereum will still be most popular smart contract platform in the world. Limited supply or not, it wouldn't make much difference for the Blockchain itself other than the current valuation of the cryptocurrency across the market. Time will tell us what lies ahead for ETH as we get one step closer towards the Casper PoS upgrade. Just my thoughts

[qazgroup]

I think limiting Eth supply should be a priority it will make it a purely deflationary  coin and also investor confidence will boost as they will be sure that no new coins can be generated and dumped in the market and the most important is this will make the price to grow massively.

[Yamifoud]

It could be hard to limit the supply since it was on the market already for a very long time. May limiting its total market could help to move the price but it is not the case that developers have to see but instead, to look it's another applicability in the crypto market. I know we all wanting to see ETH price taps for another high but because of its market demand is not really at high we, therefore, couldn't expect that it moves that way.

I believe that $1k during the 2017 Bullrun is the only highs that we are able to see in ETH history.

[Abiky]

It could be hard to limit the supply since it was on the market already for a very long time. May limiting its total market could help to move the price but it is not the case that developers have to see but instead, to look it's another applicability in the crypto market. I know we all wanting to see ETH price taps for another high but because of its market demand is not really at high we, therefore, couldn't expect that it moves that way.

I believe that $1k during the 2017 Bullrun is the only highs that we are able to see in ETH history.

Agree. It looks very unlikely that developers would implement a hard cap in ETH's supply since the Ethereum blockchain has a long time since inception. It might do more harm than good as it'll require a contentious hard fork which I believe not everyone will agree with. With a limited supply, comes a higher price per coin. But considering that ETH was designed to be a platform for decentralized applications, having a higher price greatly defeats its purpose. After all, "gas" fees in ETH will rise like never before. It'll become costly in terms of USD for the end user to interact with a smart contract of his/her choice. For the good of ETH's adoption in the mainstream world, it's best to leave it as is.

Since we already have a limited version of Ethereum (called Ethereum Classic), there's nothing to worry about. Miners who want scarcity of coins on a smart contract platform would choose ETC over ETH. But everyday users will surely use ETH over ETC because of its greater accessibility for smart contracts. Until now, a high price per gas in terms of USD on the ETC blockchain is not an issue. That's because each ETC coin has a low price on the market. Expect to see reduced mainstream adoption of the ETC blockchain once prices start to rise above $2k because of the higher-priced gas fee in terms of Fiat for each interaction with a smart contract.

Nonetheless, it might be the case that ETH will rise no more than $1k per coin. It'll never be able to reach higher prices in the future as long as its supply is undefined. While that's good news for everyday users, it's not for the "hodler" or long-term investor. That's the case with inflationary cryptocurrencies like ETH and EOS. At least, ETH proves to be a solid smart contract platform that focuses on decentralization above anything else. Just my opinion