As the Ether-1 Masternode/Service Node System is now active, the team decided it was time to analyze the ETHO emission rate and how to responsibly cap the supply in circulation all while further enticing node ownership and not hampering development of the project in any way. It is not healthy for any economic ecosystem to have an unlimited supply of currency as this will always push inflation to uncontrollable levels and destabilize the system.
As with any change in block rewards, the underline codebase will need to be modified to reflect the new schedule. This update has already been included in the Ether-1 Masternode/Service Node binary so no modifications will be needed at this time to the Masternode/Service Node Network. For all other nodes (including the Ether-1 Desktop Wallet, Mining Pools, and all other instances) an update will be required. The Ether-1 team will be releasing Ether-1 V4 at the end of July so everyone has plenty of time to update wallets and nodes prior to a block height of 1 million.
A larger block reward percentage allocation for node owners will help further our goal of complete decentralization. We looked at the ETHO emission rate with two major goals in mind. First we wanted to re-allocate a larger percentage of the block reward to masternode owners and this was done by slowly decreasing the miner reward while leaving the masternode reward unchanged for the first 6 million blocks. Second we wanted to slowly decrease the overall block reward over time, adding a healthy supply cap to the currency to control long term inflation. This will be accomplished by decreasing all rewards at a steady pace (every one million blocks) starting at a block height of 6 million. Taking a look at the reward reduction schedule, this will effectively give ETHO a supply cap of just under 85,000,000 coins (assuming an uncle rate of 2.5%).