EIP-1559 could make Ethereum deflationary - Money supply issues intensify discussion

There has been a long-running debate in the crypto community between Bitcoin enthusiasts and the Ethereum community. The core issue is Ethereum’s lack of a fixed supply compared to the 21 million Bitcoins that will theoretically be mined when “mining” ends.

The tweet from Morgan Creek Digital co-founder Anthony Pompliano was the trigger for the debate over money supply limits, which came days after a controversy sparked by Blockstream CEO Adam Back who compared Ethereum to a Ponzi scheme.

He also criticized Ethereum’s current model of providing 70% of the “pre-mined” supply, adding that Ethereum is a Ponzi scheme. In response to Vitalik Buterin, Back said:

70% pre-mining is incompatible with ethics. Everyone prints their own money and promotes their own air projects, which is an inappropriate phenomenon that leads to capital misallocation.

This statement by Adam Back, a well-known Bitcoin maximalist in the crypto space, nicely summarizes the views of other users and like-minded people. In this sense, Pompliano’s tweet broadens the discussion on Ethereum’s supply by redirecting it to “another problem” – the current existence of Ethereum. Although he does not consider Ethereum to be a “bad” platform, he objects to Ethereum being a stable money.

Providing an exact number for Ethereum’s supply appears to be complicated. Several maximalists, including founder Vitalik Buterin, have asked Ethereum developers, but their responses have seemed evasive and have been criticized for a lack of “accuracy.”

Developer Péter Szilágyi has been one of the most active members of Ethereum Core and can resolve some community debates. In a series of tweets, Szilágyi emphasized that the exact number of Ethereum supply does not take into account the amount of ETH that has been lost. In addition, he provided a link to the code of a program that can calculate an estimate of the current supply of Ethereum.

In a tweet with code, the developer estimated the theoretical supply of Ethereum in response to the skepticism:

112100917 is the current supply of Ethereum. This world can accommodate the existence of two currencies, BTC is currency and ETH is also currency. Forget irrelevant arguments. Bitcoin and Ethereum are not rivals, they will leave banks with nowhere to go together.

EIP-1559 and Ethereum’s Security

While the debate remains, Ethereum co-founder Vitalik Buterin believes that attention should be directed elsewhere. Buterin has been one of the advocates for the implementation of the EIP-1559 proposal, which proposes to change and improve Ethereum's reward mechanism. As Vitalik said, EIP-1559 and the transition to a consensus POS proof-of-stake algorithm will make Ethereum a deflationary cryptocurrency.

People love embarrassing attempts to make Ethereum appear like it lacks a pre-set “21 million” or something like that, and transaction fees over the past two months have been high enough to completely ignore PoS rewards after EIP 1559.

Buterin also stated that the supply of Ethereum is 112,086,970 ETH. In addition, he emphasized that network security is more important than a fixed supply:

I believe that Ethereum can only "satisfactorily achieve faith in currency" after the eth2+EIP 1559 launch time is implemented and proves its sustainability.