It appears that Ethereum co-founder Vitalik Buterin may finally get what he wanted: A cap on the total Ether supply. Buterin originally jokingly suggested a cap of 120 million Ether back in April 2018. Now, the actual Ether supply could peak at that amount at 120.5 million ETH, according to data from Ultrasound Money. His suggestion, albeit a joke and done in jest, was intended to spark a debate on the issue.

At the time, it was dismissed as being unhelpful and unworkable, simply because the circulating supply of Ether was around 98.5 million. The London hard fork, the Merge and the introduction of EIP-1559 all combined to create a deflationary trend in the Ether supply.

The main purpose of EIP-1559 was to make Ether transactions more predictable and thereby improve the fee estimation process. This action, however, ended up creating an effective supply cap. EIP-1559 works by burning a portion of Ethereum transaction fees. This action can be seen as a refund for ETH holders and ties the value of ETH directly to how much the network is being actively used.

The deflationary nature of the Ether has resulted in the amount of Ether staked continuously increasing, reaching an all-time high of 566,000 validators. Interestingly enough, even though the price of Ether is around half of what it was during the previous bull market, the current Ether supply has declined by 1.07% since the burn began.

This increases the inflation rate of Ether relative to other asset classes, as the inflation rate of Bitcoin is 1.74%, while the inflation rate of gold is projected between 2-3% in 2023. It seems that Buterin will be vindicated as everyone can now see the value of his original suggestion, even if it was a joke.



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