0

There is a maximum number of bitcoins that can be produced (21 million). But until this threshold is met, there is not annual cap as to how many bitcoins can be produced in a given year.

I read that there is no maximum number of Ether units that can be produced over the Ethereum protocol's lifetime.

But is there a max supply of how much ETH can be produced in a given year? If yes, how come and who decided on this?

Improve this question

1 Answer 1

Reset to default
1

As you mentioned, there will only be 21 million bitcoins ever. So, Bitcoin is deflationary.

Ethereum, on the other hand, is inflationary. It will always create new ether (unless they make a hard fork to change that). To help with this, the EIP-1559 was introduced, to burn some fee eth on every transaction. More details here. Since a bit of ether from the fee is burned every time, Ethereum now behaves a bit "deflationary", but it's not enough to call it deflationary.

At the moment, Ethereum provides the miner with 2 new ethers per block (plus a lot of ether that already existed in fee, minus the little percentage of burnt fee). Ethereum creates a block about every 15 seconds. And based on this data, about 6431 blocks are produced on average daily. If we multiply that by 365 days a year is about 2347315 blocks per year, multiplied by the amount of ether generated in each block (2) is about 4694630 ethers per year.

Looking at this transaction, we can see the amount of ether burnt:

enter image description here

The Ethereum founders decided on the number of ethers to provide per block, as Satoshi decided the amount of bitcoin to provide per block.

Here you can see the reward of one recent block: https://etherscan.io/block/15393087

enter image description here

It shows 2 + fees minus the burnt fees:

enter image description here

Improve this answer
2
  • 1
    Thanks for this explanation. I was reading this post and it mentions "Every year, in perpetuity, 18,000,000 ETH will be issued though the mining process." Is that incorrect based on your explanation? It seems the Ethereum founders decided how much ETH would be generated per block, but a max cap per year, like the quote suggests.
    – StatsScared
    Commented Aug 22, 2022 at 22:53
  • That sounds interesting. I wouldn't know where they got that "18,000,000" ethers from. If you take a look at a block explorer and make your own calculation based on the blocks and rewards that you see, it does not correspond with the amount that they are mentioning there.
    – Jeremy Then
    Commented Aug 22, 2022 at 23:16

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.