According to the most recent data, the total supply for the second-largest cryptocurrency, Ethereum's ether, has nearly doubled since 2016.
The supply of ether appears to be outpacing the original expectation for the cryptocurrency. Ethereum has added more than 35 million ETH over the last three years, bringing the total supply to 107 million. While Ethereum has a defined process for adding new coins to circulation, the pace of inflation is concerning some investors.
Vitalik Buterin, Ethereum’s co-founder, originally estimated that the supply of ether would be around 97 million by the year 2025, up from 72 million ETH in 2016. However, that ten-year projection has already been surpassed by 10 million. More troubling is the statement made by Buterin claiming that the cryptocurrencywould not surpass 104 million (citing the year 5000 AD as a benchmark)--which again, has already been surpassed within several years of the project’s launch.
While Buterin’s comments were made several years ago, the co-founder was adamant that ether’s supply increase would remain limited, saying:
Hence, in the foreseeable future, the supply will not go far above 100 million.
Ethereum has attempted to correct for the difference in projected and actual supply by tailoring a difficulty bomb that will reduce the profitability of mining and the amount of ether being released into circulation. However, the difficulty bomb has been delayed multiple times now, and the issuance rate was only dropped from 3 ETH to 2 in March, instead of the expected 1 ETH.
Ethereum issuance dropped in March 2019 | Source: EtherScan
The project’s hope is to implement the difficulty bomb in a way that corresponds with the launch of Ethereum 2.0 and the proof-of-stake algorithm. The difficulty bomb will gradually increase the amount of time between blocks being mined, up from its current 15 seconds. Some are estimating that the block time could reach as high as 1-2 minutes before the use of ETH becomes significantly impacted, which highlights the importance of properly timing the bomb’s implementation.
However, if the difficulty bomb is delayed again, Ethereum could witness an additional 20 million ETH added to the supply by 2.0’s launch in 2021, which would be a massive deviation from the originally predicted amount of ether in circulation.