23

It seems like the answer is still in flux, but it would be nice to have a single answer to this question that we can update over time.

  • To confirm, do you mean inflation of the price/value of Ether (i.e. price-based inflation), or its level of issuance (i.e. monetary inflation)? I'd assume the former, but it's worth clarifying. – Richard Horrocks Feb 25 '17 at 23:53
  • I mean inflation of the money supply. – Brian Armstrong Feb 28 '17 at 5:18
22

The question is What is Ethereum's inflation rate? , but I'm assuming and answering the question What is the issuance rate of Ether.

The short answer

In 2017 the issuance rate of Ether is 14.75%.


The longer answer

Current Ether Per Block

Roughly 5 Ethers per block are issued. Because Ethereum rewards Uncles it means that there may be more or less than 5 Ether.

See :


Rough Projections Based On 5 Ethers Per Block

Joseph Lubin wrote an interesting article that addresses your question:

https://blog.ethereum.org/2014/04/10/the-issuance-model-in-ethereum/

Original plan for Ether Issuance

If you consider the issuance model presented above you can see that the rate at which Ethers "inflate" is designed to change regularly and always in the downward direction.

For more in depth data please see this chart: https://docs.google.com/spreadsheets/d/150B9eytmjZ642tYD0jSdFZQHldmk7VG5Wm3KVctydpY/pubhtml

In 2017 we are looking at a 14.75% inflation rate. However this is only while the network is using a Proof of Work model, once Proof of Stake kicks in, the inflation rate of change could itself change.


Edit: Additional Information

The Spanner In the Works - AKA Difficulty Bomb. AKA Ice Age. AKA Casper. AKA Proof of Stake. AKA Developers Making Changes.

Ok, so all the above would be nice and helpful to give you a rough idea of how many Ethers there will be at a particular point in time. However there is the Difficulty Bomb which messes the whole thing up. And then there is Ethereum's Proof of Stake model name Casper, which will also affect the issuance of Ether.

What Does the Difficulty Bomb Do? It basically makes it harder to make a block, which means that it will take longer for a block to be created. This is dubbed Ice Age.

The effects of Ice Age:

Block 3000000 | approx ETH supply 87962556  | time '2017-01-16 00:38:33.067775' | blocktime 14.86
Block 3500000 | approx ETH supply 90612556  | time '2017-04-11 18:09:34.273529' | blocktime 15.27
Block 4000000 | approx ETH supply 93262556  | time '2017-08-15 18:20:24.642729' | blocktime 30.01
Block 4500000 | approx ETH supply 95912556  | time '2018-11-03 05:55:48.912370' | blocktime 136.71
Block 5000000 | approx ETH supply 98562556  | time '2025-10-02 11:47:30.658317' | blocktime 835.81
Block 5500000 | approx ETH supply 101212556 | time '2128-03-20 09:14:16.483692' | blocktime 17183.83
Block 6000000 | approx ETH supply 103862556 | time '5189-09-26 20:57:59.367004' | blocktime 520901.19

There are plans to reduce the amount of Ether issued per block and defer the difficulty bomb. Or keep the difficulty bomb and let block times get longer, effectively reducing the amount of Ether that will be released in a particular space of time.

Plans to Reduce the Issuance Rate

There are actually development discussions about decreasing the issuance rate leading up to PoS. https://github.com/ethereum/EIPs/issues/186

See Vitalik's Reddit post from 2016-12-18 : https://np.reddit.com/r/ethereum/comments/5izcf5/lets_talk_about_the_projected_coin_supply_over/dbc66rd/ .

PoS is likely to lead to quite low issuance rates; I am not comfortable promising zero, but if it is not much less than the current PoW then there is little point in making the switch in any case.


Conclusion:

Nobody knows, it's all up in the air and even the current model without any PoS or PoW Ice Age is not precise.

  • Thanks! You are correct, I'm asking "What is the issuance rate of Ether" – Brian Armstrong Feb 28 '17 at 5:20
  • Thank you for your answer and the Spreadsheet you provide. However, I would like to know on which assumptions your calculation is based and if you could add the sources of your data. Thank you very much! I am currently writing a master thesis and I struggle to find an analysis of the ETH issuance scheme. Thanks in advance – LePoulpe Mar 6 '17 at 10:13
  • @LePoulpe Converted answer to comment. Thank you for your answer and the Spreadsheet you provide. However, I would like to know on which assumptions your calculation is based and if you could add the sources of your data. Thank you very much! I am currently writing a master thesis and I struggle to find an analysis of the ETH issuance scheme. Thanks in advance – Rob Hitchens - B9lab Mar 6 '17 at 12:38
  • @LePoulpe I've added some additional information. – Samuel Hawksby-Robinson Mar 6 '17 at 17:57
5

According to a recent tweet by Vitalik Buterin (5:26 PM - 27 Jun 2017) Ether inflation will be kept around 0.5% and 2% after Serenity which is Ethereum's fourth major milestone that will implement Proof of Stake.

Once Casper comes out, ~0.5-2% annual seems feasible. Once we add partial tx fee burning and if fees go up, may go to 0 or lower.

Please take notice that this information is completely speculative and it might change in the future.

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