On April 1st, Vitalik Buterin posted an Ethereum Improvement Proposal that looked serious. He proposed a hard cap of 120 million coins, with no new issuance after that point. Buterin argued that minti
On April 1st, Vitalik Buterin posted an Ethereum Improvement Proposal that looked serious. He proposed a hard cap of 120 million coins, with no new issuance after that point. Buterin argued that minting coins to miners had stopped serving a real purpose. "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 wrote.
The Ethereum community split on whether this was real or a joke. Buterin answered on April 2nd: a meta-joke. His goal was watching people argue about the proposal's legitimacy. "The point was seeing people argue about whether or not the proposal is real," he tweeted.
Vlad Zamfir, who leads the Casper Update project, released a detailed rebuttal on April 15th. He and Buterin both care more about protocol health than price. But Zamfir saw a problem that Buterin glossed over.
A hard cap would appeal to investors seeking scarcity. The altcoin space learned this long ago. Now nearly every altcoin advertises its finite supply, and buyers hunting for scarcity check the supply model before purchasing. "The perception of scarcity of a good makes it more psychologically appealing to potential buyers," Zamfir wrote.
Zamfir's bigger concern was timing. Ethereum issues about $10 million per day to miners. Under Buterin's cap, miners would claim another 22 million ETH before issuance stopped. That totals over 11 billion dollars at market value. But the community had not settled the foundational questions. What economic needs would justify issuing that much ETH? What public goods might the network fund with new coins, and what would those cost? Could the community estimate those figures today? Was 22 million ETH the right number, too much, or too little?
"We don't know what Ether supply model is optimal," Zamfir wrote. "It's still unclear today how much issuance will be required (if any) for the security of the consensus protocol."
The Casper upgrade would move Ethereum from proof of work to proof of stake, changing how much new issuance the network needed. The community lacked the knowledge to cap ETH before settling those questions. Choosing a hard cap now would be premature.
Nick Johnson, another Ethereum developer, shared Zamfir's skepticism about the proposal.
