On Sunday, April 1, Vitalik Buterin of Ethereum proposed a 120-million hard cap on Ether. The cap, he suggests, could be part of the next hard fork which will likely be the first phase of the Casper update.
A hard cap of 120,204,432 to be exact was recommended by the latest Ethereum Improvement Proposal – twice the amount sold in the original 2014 sale. Buterin sees the implementation of the hard cap as part of the next phase of the Casper update, wherein all the rewards in the sharding system can be redenominated to reflect the cap as a finite Ether supply.
The founder explained his reasons for suggesting the cap in his announcement, saying “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.”
If the EIP is adopted when it is already too late to set a 120-million hard cap, Buterin says, then the next logical cap would be 144,052,828 – exactly twice the amount of Ether sold in the genesis block.
According to CoinMarketCap, there are more than 98 million ETH in circulation.
Buterin addressed the concerns of miners about diminishing rewards in Ethereum’s change to a proof-of-stake model, part of the Casper update. He explained, if Ethereum stays with its current proof-of-work model, rewards will still gradually decline over time.