Miners will go from receiving a reward of 4 ETC per mined block, to 3.20 ETC.
The move, inspired by the Bitcoin halving, seeks to slow down Ethereum Classic’s inflation.
Ethereum Classic is scheduled to reduce its reward per block mined this March. Miners will go from earning 4 ETC per block to receiving a reward of 3.20 ETC, as stipulated by the new monetary policy. The measure seeks to slow down the inflation of its token by making it increasingly scarce, limiting its issuance for the next 121 years.
The Ethereum Classic Developer Panel, ETC Core, reported that the reward reduction will take place in approximately 14 days. When the blockchain reaches the height of block 10 million, the miners of the network will see a 20% decrease in their income. In this way, network inflation is expected to drop to 5.49%.
The new Ethereum Classic measure is inspired by the monetary policies of Bitcoin, a network that has a mechanism – known as halving— that controls your inflation. The halving it is an automated process, which is incorporated into the operation of the network in order to provide a currency with a “solid value”. That is, a currency that does not lose its usefulness and value over time.
#EthereumClassic block reward reduction is estimated to occur in about ~14 days or block 10 ml. #ETC is the ONLY top turing complete public #blockchain with a fixed monetary policy.
🔗 https://t.co/Fiy2vD3F7E by @hitchcott
🔗 https://t.co/vqvG9M5OFI by @MyEtherplan pic.twitter.com/HXqvCUWDEV
— ETC Core (@etc_core) March 4, 2020
For this, Satoshi Nakamoto decided to incorporate a policy where every 210,000 blocks the reward for mining is reduced by half, until a moment will stop issuing new bitcoins. The plan is that, in the next 120 years, a maximum total of 21,000,000 bitcoins will be created. No more no less. Idea that inspired Ethereum Classic developers to develop a mechanism inspired by the halving which will also limit the issuance of the tokens, safeguarding the value of your currency.
The reduction of the reward in ETC was introduced in the year 2017, after this new blockchain was born from a fork to Ethereum. Because the original network has no limits monetary policy, the Ethereum Classic community decided to carry out an update that would reduce the reward from 5 ETC to 4 ETC per mined block.
It was for this year that this measure was incorporated for the first time, which later would adapt a a 20% reduction in rewards per block over the next 121 years. Ethereum Classic now has programmed in its operation that every 2.38 years, when the blockchain manages to process 5 million mined blocks, the reward is reduced until it completely limits the issuance of new tokens.
The developers confirmed that they want to “mimic Bitcoin supply targets” with this new policy. Because of this, if they manage to meet their goal, could issue a total of 199,000,000 FTE or up to 211,000,000 FTE, if the block producers include obsolete blocks and claim the reward. This being the Etherum Classic supply plan for the period between 2015 and 2136.
It must be taken into account that any reduction in the reward has a direct economic setback to the mining of these blockchains. For example, Litecoin last year carried out a halving in its network, which forced several miners to disconnect their equipment due to lack of profitability. Likewise, it is expected that the halving of Bitcoin that is scheduled for this month of May also has a direct impact on the industry and has made several mining equipment of past generations obsolete.
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In two weeks the mining reward in Ethereum Classic will be reduced by 20%