Submitted by acne Baleriny offer EIP 960, which establishes a fixed upper limit
the number of ETH in the treatment, which many felt to be an April fool’s joke, became the subject of the first serious discussion at the meeting of the developers of Ethereum on 6 April. Buterin said:
«The proposal means that all rewards remain inside of Ethereum. This includes current awards to PoW miners, as well as all future payments, including awards validators Casper, awards operators sharding for the creation of units and any other described in the Protocol – their total amount is proportional to the difference between the maximum number of coins and the current amount.
Consequently, the total number of coins in circulation, instead of the current linear growth will asymptotically tend to the upper limit. So it will be as long as we do not introduce rent for storing information in the blockchain and partial destruction of transaction fees. Then the total number of coins will find a point of equilibrium below the maximum, where the amount of burned coins will be roughly equal to the number of issued».
The opposite opinion was expressed by the developer Fund Ethereum Nick Johnson (Nick Johnson):
I think the upper limit is a bad idea. The price is the reliability of the network is financed by inflation, or transaction fees. Funding of some commissions stimulates the accumulation and detrimental active ecosystem. This can lead to a deflationary spiral when prices are rising (because of growth rate), and the number of transactions decreases, which leads to further price increases and this situation will be repeated.
Buterin disagreed, noting that transaction fees are not constant (in ETH), and depend on the balance between supply and demand. Referring to the concerns of Johnson on the unjustified growth rate, which can lead to growth of savings and unwillingness to spend it, he said that ETH, like other cryptocurrencies, it has a high volatility and he believes that limiting emissions will lead to any significant changes in the course.
Another argument of Johnson V. EIP 960 is that the lack of inflationary reserve can cause the amount of income from commissions alone will not be able to maintain the security of the network (the validators will start to leave the system). It Buterin replied:
«There are no lows, there is only levels. If payments are reduced, we will come to that instead of 20 million ETH on validatory deposits we will have 10. On the other hand, inflation may lead to depreciation, which will lead to the same result, less capital will be to protect the system.
Of course, all the possible consequences is difficult to assess, but personally I think that the floating charge levels capable of providing sufficient revenue to ensure the reliability of the blockchain. If not, then on the first place there is the question of the real value of the system that we are building».
Following the argument of Johnson V. limitations and benefits of inflation:
«The value of the system will be higher if awards will be made on the inflation issue, because in this way the security of the system will pay for not only those who produce the transaction (i.e., active in the network), but passive investors (i.e., they receive less investment growth)».
And it’s Baterina found the answer:
«I used to think so. However, Vlad (Zamfir – approx. TRANS.) has shown that if you leave the inflation, almost any token ERC20 becomes a better store of value than ETH. After all, if the ETH remains a unique token Ethereum ecosystem that the reliability of the entire system is provided by its inflation, you can print a token with a missing ERC20 inflation, and promote them on the market. Then it may be a situation of «tragedy of the Commons» (the term of game theory), when no one wants to support the ETH, despite the fact that it is necessary to ensure the safety of the system.»
Hudson Jameson (Jameson Hudson) asked what it would take to implement the proposals. Buterin suggested that it is possible to make remain on the amount of the difference between the maximum and the current offer and place it into a special account. Then all rewards will be taken from this account.
Jameson noticed that judging by the reviews in social networks, the offer is highly popular, but its implementation will require hardwork. Do I need to include this proposal in the second part of Metropolis?
Buterin: «There are two options. If the community wants it,we can include it in the Metropolis. Or we can wait to implement the next stage Casper».
Then Jameson said that to complete, then should officially make offer EIP (EIP-960 was only an invitation to discussion). He said, «boy, you ready to do this?»
«Not yet – I’d like to wait and see the reaction of the community,» concluded Buterin.