Vitalik Buterin, Ethereum Co-Founder, said a podcast interview with POV Crypto called “Internet Money” will drastically reduce issuance on the ETH 2.0 upgrade. Discussing some of the differences between Bitcoin (BTC) and Ethereum (ETH), Buterin explained why the team chose Proof of Stake as the mechanism upgraded for consensus:
“One of the reasons why we’re doing Proof of Stake is because we want to greatly reduce the issuance. So in the specs for ETH 2.0 I think we have put out a calculation that the theoretical maximum issuance would be something like 2 million a year if literally everyone participates.”
He said the current participation in the testnet sees around 100,000 ETH issued a year. The current Ethereum network is issued annually at around 4.7 million ETHs. Eth 2.0 issuance is expected to be between 100,000 and 2 million a year somewhere, with the most likely scenario being much less than 2 million.
Burning Could Reduce Supply
Buterin also mentioned that the total circulating supply could see a net decrease due to a portion of each fee being burnt at times of high transaction volumes. “There is this base fee parameter that is charged by the protocol,” he said, explaining that the transaction fee is broken into two parts when you send a transaction — the first goes to the miner as a ‘tip,’ while the other part is simply burned.
Another key upgrade to the Ethereum network is adjusting block sizes in response to network activity, rather than fees. “Instead of having volatility in transaction fees, we have volatility in block size,” he said.
This will help to reduce some of the issues that users are currently facing, such as difficulty predicting the optimal amount of the fee and excessive processing times for a transaction.
Support for ETH 2.0 Continues to Grow
With news this week that a major mining pool run by OKEx will join the ETH 2.0 testnet Topaz as a validator, support is continuing to grow for the testnet. Currently the testnet has 24,000 active validators and has reached over 20,000 validators in four days.