Ethereum is world's second largest cryptocurrency and it has crossed 100 million tokens which are currently in the circulation. This oversupply of tokens can potentially erode the value of cryptocurrency as it can depress prices and scare away speculators and miners. World's largest cryptocurrency Bitcoin has a cap of about 21 million bitcoins in circulation and currently has about 17 million coins in circulation.
Ethereum total supply has been increasing every year by about 10%. There has to be a certain scarcity in the supply for the value of the asset to rise and oversupply of any currency can devalue it. Capping the total supply of a cryptocurrency also has downsides as well such as ending up only as speculative product.
Ethereum founder Vitalik Buterin has been thinking of putting a cap on Ethereum supply to around 144 million but nothing has been finalized yet.
Along with the problems of over supply, Ethereum is also facing scalability issues which restrict the number of transactions that it can have per unit time. Currently it is able to process about 6 transactions per second where as bigger players such as MasterCard and Visa perform thousands of transactions per second.
Ethereum is thinking 'proof of stake' solution which is a new way of validating transactions on blockchain which will allow it to scale to 1 million transactions per second to even 100 million transactions per second. Proof of Stake concept works on the concept of sharding which makes it unnecessary for the entire network to verify every single activity.