Like the buzz of a particularly pernicious insect, a seemingly un-swattable question has dogged Ethereum over the last few days: How to easily and independently verify the monetary supply of its native coin ETH?
Unlike Bitcoin, and many other cryptos, there’s no limit or cap on Ethereum’s cryptocurrency, ETH. Instead, its supply increases every year. And, while Bitcoin has a built-in function to easily query its supply, Ethereum doesn’t—a fact that Bitcoin maximalists have exploited with glee over the past days.
“The Ethereum community can’t figure out what the total outstanding supply of the asset is,” tweeted Bitcoin influencer and co-founder at Morgan Creek Digital Anthony Pompliano, on Monday, “This is a MAJOR problem and showcases why ETH is not good money.”
But Ethereans begged to differ and said that the issue comes down to fundamental differences between the two blockchains. So what’s the answer and why has it been so hard to pin down?
A simple matter of calculation
“It’s not, in principle, very difficult, but it’s just that it’s not something that people have been particularly interested in. So the methods to do it just haven’t been implemented in clients,” Ben Edgington of Teku, an Eth 2.0 client operator, told Decrypt, adding, “The facility is there, you just need to write a bit of code.”
In response to a challenge put down by Bitcoin educator Pierre Rochard, several Ethereum devs did just that over the weekend. A coded “script” by systems engineer and blockchain enthusiast Marc-André Dumas won the proffered bounty.
Dumas’s calculations were based on the amount of ETH created—a metric also used by token trackers such as Coinmarketcap. But, there’s quite a bit more to it than that, and Dumas later admitted that there was a bug that overestimated supply in his calculation.
The tricky aspect of calculating Ethereum’s supply is that, unlike Bitcoin, not only do the block rewards need to be added up (although for ETH, there are two types: genesis and mining rewards) but there are also so-called “uncle rewards” to take into account.
Uncle rewards are given for blocks that nearly get into the blockchain but don’t quite make it, and exist primarily in order to improve decentralization. They can also have children: “nephews.”
Uncles are issued with a delay of up to six blocks and can form up to 87% of the block reward—making them crucial to account for but tricky to calculate.
In addition, ETH that has been erased from the network also needs to factor in the equation. This happens on the rare occasion when a smart contract is set to self-destruct while sending its remaining funds to itself.
“Since it’s ugly to calculate the Ether supply by adding up block rewards, uncle rewards and subtracting self-destructs, people easily mess it up. But IMHO that’s the wrong approach,” Ethereum core developer Péter Szilágyi told Decrypt.
Ethereum’s Achilles heel is Bitcoin’s obsession
Instead, he recommended adding up the amount of ETH in all the accounts that exist at a recent block. This produces a slightly lower number because destroyed ETH is not included.
Szilágyi has written a program to perform the operation. “But you’ll need a fully synced client to add it up,” he said. “I don’t have a number now and running the code to iterate through the entire database will probably take more than your deadline,” he added.
Ethereum core developer, Martin Holst Swende told Decrypt that the current total supply was about 112 million ETH, which approximately corresponds with data from Coinmarketcap, Etherscan and other aggregators.
Holst Swende has written a “mechanism” to arrive at a calculation, but said that “the degree of importance one places on knowing the exact figure at some specific block is obviously subjective. I personally see it as more important that it can be calculated, which it obviously can, fairly easily,” he said.
But not easily enough for the Bitcoin maximalists who—over the weekend— took pleasure in the fact that different price aggregators arrived at varying figures.
Holst Swende explained that these “calculations vary because the question was not asked for a particular block number, so depending on what exact block people are calculating it for, they will arrive at different answers.”
The various nuances that need to be considered in order to arrive at a figure for Ethereum’s total supply were addressed in detail in a (long) thread by crypto evangelist Andreas Antonopolous, on Monday.
Despite being an advocate for Bitcoin, Antonopolous scolded the “experts” who dismissed all the nuances needed to calculate ETH’s total supply, and accused them of displaying their own ignorance.
But perhaps just as important is the dramatic distinction between the concerns of Bitcoiners and Ethereans—which the debate illuminates.
“Bitcoiners are obsessed with this. The defining property of their blockchain is that it has fixed issuance—this is their thing. For them, it’s all about money supply. In Ethereum it’s all about getting stuff done,” said Edgington.
And on the list of “stuff” to get done is a reduction in the issuance of ETH to near zero. In 2017, mining generated 9.2 million new ETH—a 10% increase in its total supply.
One idea that would reduce issuance is a proposal (named EIP 1559) to introduce a mechanism that burns part of a transaction fee, and takes it out of circulation.
“It is possible that within a couple years, ETH may not only be the most useful asset in crypto given its on-chain economy, but also crypto’s most credibly scarce asset given ETH 2.0 and EIP 1559,” tweeted Ryan Watkins, a researcher at crypto analysis startup Messari.
Bitcoin maxis will be so thrilled.