Debate over Ethereum issuance flares again in the crypto community

Debates about Ethereum’s supply limit, ongoing since 2015, have gained new momentum after MakerDAO developer Marc-André Dumas released a script that outputs the size of the issuance of the second-largest cryptocurrency.

My ethsupply script was counting some uncle rewards twice, which led to the discrepancy. Many thanks to @junderwood4649 for identifying the bug and everyone else who reviewd the code.

As you will see below, the delta with Etherscan is now only 3 ETH.https://t.co/dnDFTs6YlO pic.twitter.com/NxKHeSSTow

— Marc-André Dumas (@marcandu) August 8, 2020

Dumas initially reported 112.43 million coins, but later revised the estimate to 112.093 million, narrowing the gap with Etherscan data to 3 ETH.

Other resources, such as Messari, Coinmetrics, Coingecko and Blockchair, showed different figures.

I didn’t believe so I just testedhttps://t.co/0CbDOSTduf 112086620https://t.co/Q4zY8cc4Wn 112429827https://t.co/fnj6CHINYs 112086460https://t.co/erY12BzMDC 112086233https://t.co/QN07Qj7Yn0 109372852https://t.co/jbz6GeQXWk 112086403https://t.co/FCBjIASD6J 111,743,459

— Leon, the fact checker (@factcheckmypost) August 7, 2020

Answering the question of why such discrepancies occur, Ethereum co-founder Vitalik Buterin suggested that some blockchain explorers exclude coins that were “burned” in smart contracts. Others, in his view, are “too lazy” to do so.

My best guess is that some explorers are subtracting coins that got destroyed due to contracts getting self-destructed while holding coins and others were too lazy to do that and just looked at uncle rewards?

— vitalik.eth (@VitalikButerin) August 8, 2020

Unlike Ethereum, Bitcoin holders can avoid relying on blockchain explorers and obtain the sought value by calling bitcoin-cli in a full node client.

It is a trivial task to verify the Bitcoin monetary supply using bitcoin-cli with your own full node. pic.twitter.com/KMMXeE5ytf

— Michael Goldstein (@bitstein) August 6, 2020

The discrepancy in ETH issuance data understandably drew criticism from Bitcoin maximalists. Among them was even a senior Visa executive. He described Ethereum as a middle ground between Bitcoin, with its fixed issuance, and the dollar, where issuance is not capped.

Bitcoin: unchangeable supply

Ethereum: unknown supply

U.S. dollar: unlimited supply #Bitcoin #Ethereum $USD

— Andy Yee (@ahkyee) August 8, 2020

Against the backdrop of the heated debate over ETH’s true issuance, Vitalik Buterin presented a chart of transaction fees over the past two months. He noted that fees were high, but after the activation of EIP-1559, staking rewards in such cases could be fully offset. EIP-1559 contemplates that part of the fees collected will be burned, thereby limiting inflation.

I love how people have been so awkwardly trying to press ethereum on its lack of a preset «21 million»-like hard cap, when transaction fees the past 2 months have been high enough to more than fully cancel out PoS rewards post-EIP 1559. pic.twitter.com/TuyZMotacu

— vitalik.eth (@VitalikButerin) August 7, 2020

Another discussion was started by Blockstream strategic director Samson Mow. He asked whether limiting issuance is a security vulnerability for the blockchain. Buterin answered in the affirmative, noting that the mechanism would not guarantee rewards.

If the chain dies, the coin dies. So IMO ensuring a minimum level of security of the chain, through a minimum coin issuance (which can be clawed back with EIP 1559-like techniques if there’s usage), is the correct path.

— vitalik.eth (@VitalikButerin) August 8, 2020

According to the Ethereum co-founder, the right approach is to minimise coin issuance, with EIP-1559 adopted. In his view, this could achieve the minimum level of network security.

If the chain dies, the coin dies. So IMO ensuring a minimum level of security of the chain, through a minimum coin issuance (which can be clawed back with EIP 1559-like techniques if there’s usage), is the correct path.

— vitalik.eth (@VitalikButerin) August 8, 2020

On the question of what this minimum value is, Buterin replied that it is a matter of intuition. He suggested that this is how Bitcoin’s creator Satoshi Nakamoto determined issuance, the halving schedule and the block size. Accordingly, the intuitive approach also yields the gas-limit cap in the Ethereum network.

Dunno, intuition? The same technique you use to determine 1 MB, and ethereum miners use to determine the 12.5m gaslimit, and Satoshi used to pick the 4 year halving schedule…

— vitalik.eth (@VitalikButerin) August 8, 2020

Also joining the discussion was Morgan Creek Digital co-founder Anthony Pompliano. He called the lack of a clear Ethereum issuance figure a major problem; in Pompliano’s view, this prevents ETH from being regarded as “good money.”

The Ethereum community can’t figure out what the total outstanding supply of the asset is.

This is a MAJOR problem and showcases why ETH is not good money.

I’ll be explaining Monday morning.

Subscribe: https://t.co/29uk453dzh

— Pomp 🌪 (@APompliano) August 8, 2020

Pompliano explained that he holds this view because he does not subscribe to the message “Ethereum is money.”

To be clear, I don’t think Ethereum is bad. It is serving a different purpose. My point is that ETH is not good money, which contradicts the new “ETH is money” narrative that some have been trying to push

— Pomp 🌪 (@APompliano) August 8, 2020

Discussions about limits on the issuance of the second cryptocurrency have not started yesterday. Ethereum co-founder Vitalik Buterin already forecast in 2016 that the amount of ETH would not exceed 100 million coins in the foreseeable future.

In May this year, Buterin said that annual Ethereum issuance was expected to fall from the current 4.7 million coins to a corridor of 100,000–2 million after the transition to the Proof-of-Stake consensus.

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