In a few days there will be the third Bitcoin halving, but when will the Ethereum halving take place? And what is it?
Although both Bitcoin and Ethereum are based on mining with Proof of Work (for now), which means that miners receive newly created tokens for each mined block as a reward, the answer to the question of when Ethereum will be halved is not so simple.
In fact, the Ethereum protocol, unlike Bitcoin, does not include halving.
In other words, the monetary policy of ETH, the native cryptocurrency of Ethereum, differs from that of BTC.
If on the one hand one of the main focuses of bitcoin is its deflationary nature, linked to the fact that every 4 years the creation of new BTC is halved until in several years they will not be created anymore, on the other hand, the monetary policy of ETH is different.
ETH has in fact an inflationary nature, although the inflation of its monetary mass, while never decreasing to zero, remains very low and programmed.
However, every now and then a reduction of the miners’ reward is also arranged for ETH. As the chart depicting the daily rewards distributed to ETH miners shows, they have fallen over time.
A first reduction took place in 2017, until September, with a subsequent increase in October.
Another reduction occurred starting in November 2018, until February 2019 and another one between October and December 2019, but recovered in January 2020.
A reduction from 2 ETH to 1 ETH represents a halving of the reward, but it is purely coincidental that the consensus focused on halving the reward.
Moreover, not only is it not a given that the reward for ETH miners will be halved, but it is also not a given that it will be reduced.
In fact, while for Bitcoin all the halvings have already been decided, and this timeline is virtually unchangeable, for Ether decisions are occasionally taken that change its monetary policy.
To date, in fact, the final decision to cut in half the reward for ETH miners has not yet been taken, so the reward is still 2 ETH and it is not known when and if it will actually be halved.
Furthermore, even if it is indeed decided to reduce it, there is in fact no certainty that it will be halved to 1 ETH because it seems that the decision on the size of the reduction has not yet been taken.