1) Is there a way we can vote for a maximum supply in tezos ?

2) would that be a desireable thing from a tokenomics perspective ?

2 Answers 2


Answer from @murbard on reddit

Short answer: yes, there is a way to vote for a maximum supply, make it binding and prevent alterations through subsequent votes. This is, by the way, a whole lot better than waxing poetic about cultural norms, one point for on chain governance!

Long answer: overall, it's probably not a good idea to impose a maximum supply.

First of all, there needs to be a way to pay for the security of the network, and relying on transaction fees to do so is not inventives compatible. This is true for Bitcoin, and it's true for Tezos. There's a large portion of the position paper dedicated to this. Many Bitcoin developers recognize that this is true.

The benefit of proof of stake in Tezos is that it achieves the equivalent of a supply cap, without sacrificing security, by diluting those who do not participate in securing the network.

The only way to achieve this with a supply cap would be demurrage, i.e confiscating coins owned by people who do not participate in securing the network to reward those who do. This is an interesting idea, but there are hurdles to implement it.

Second of all, the possibility of inflation funding for protocol development is important in the long run, and it would be a bit foolish to try and sacrifice it.

Last but not least, the idea that there is something special about a supply cap is not based on sound economic analysis. To be sure, all else equal, inflation does hurt a currency's purchasing power, and the more inflation there is, the worse the currency might retain its purchasing power.

However, some people are under the impression that the relevant quantity is the total supply that will ever be created and thus fall for the fallacy that there is only a binary choice, a finite supply, or an infinite supply. They are looking at the wrong metric. Unlike an investment asset like a stock or a bond, a currency does not derive its value from a claim on something. It derives its value from convenience. People hold money for a variety of reasons, one of which is retaining a liquid instrument in order to retain the optionality to make purchases at some point in the future while incurring minimal transaction costs. Bitcoin and gold also hold appeal because they can be hard to seize. This is generally referred to as the convenience yield. It's the benefit you get just from holding something. In addition, some proof of stake protocols, notably Tezos, create rewards in a largely non dilutive manner.

In order to look at a cryptocurrency, you should not look at the total supply, but at the time discounted, convenience yield discounted, rewards adjusted total supply. That is the value that matters. As*

If this is too abstract, here is a thought experiment that should help you think about things: imagine if Bitcoin created 21M bitcoin and then issued 1 satoshi every year forever. The "cap" would turn infinite, but clearly such a tiny change should not have a big economic impact.

What about "stock to flow ratio"? That's already a better metric because it takes time into account, but it's far from the magic bullet some people think it is. The number of first edition VHS copies of Space Jam has a stock to flow ratio of 0, that doesn't make it valuable. A high stock to flow ratio, alongside other desirable properties can help with the formation of a convenience yield, but that's only one factor!

Ok, I've said all this, but are there any benefits to a supply cap. Again, the answer is yes.

First of all, the meme "there won't be more than 21M bitcoin" has been a powerful carrier for its message. It's a lot simpler to explain, and a lot more compelling to the average person, than going into time discounted, convenience yield discounted, rewards adjusted supply.

Second of all, the problems with the provision of security on the network could be far down the line. One might be tempted to put a supply cap and cut through that conversation and use the next ten to twenty years to make the case for against it before it becomes an issue. This doesn't seem ethical.

Third of all, if Tezos LPOs system was implemented with demurrage you could have a fixed cap and you might end up with a system that's potentially more tax efficient (I'm not a tax lawyer but the fact that this is a possibility seems to be a consensus among people who do talk about it). Demurrage would be a very hard pill to swallow for most people though.


Hey can any of you tell me how to set the maximum supply in the token contract, like how to stop Minting after the supply is reached

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