TL;DR
- A proposal submitted by six Ethereum researchers suggests progressively burning validator rewards as staked ETH grows.
- The mechanism would bring net issuance to zero when staking reaches around 60.25 million ETH, equivalent to roughly half of the total supply.
- The proposal arrived days before the August 6 deadline to be considered in Hegotá, Ethereum’s next upgrade, and faces strong resistance from the DeFi ecosystem.
Ethereum could radically transform its monetary policy if a proposal signed by six network researchers moves forward, including Justin Drake from the Ethereum Foundation.
The draft, catalogued as EIP-8361, proposes burning a growing portion of the rewards received by validators as the amount of staked ETH increases, until net issuance is completely eliminated when staking reaches 60.25 million ETH, a figure equivalent to approximately half of the total supply. At the current exchange rate, that threshold stands at around $112 billion.
The mechanism operates every 6.4 minutes, at the close of each epoch: instead of paying out the full reward generated, a fraction is permanently destroyed. That fraction grows linearly until it reaches 100% when staking hits the saturation point. Validators retain all transaction fees and tips earned from building blocks; only newly created Ethereum is subject to the burn. The transition is designed to unfold over 18 months, with a prior period of six months while the upgrade is deployed, giving participants roughly two years to adapt.
Uncapped Staking and Its Consequences for Ethereum
Behind the proposal lies a specific diagnosis: the current scheme never stops incentivizing staking. Even if all existing ETH were staked, yields would still hover around 1.5%, creating a permanent accumulation incentive. Jérôme de Tychey, one of the authors of the project, projects more than 70 million ETH staked by January 2028 if no action is taken. Today there are roughly 41 million ETH in staking, close to 34% of the supply, with another 2.5 million in the activation queue.
The reception across the ecosystem was harsh. Stani Kulechov, CEO of Aave Labs, warned that bringing rewards to zero would make most ETH lending strategies unviable. Mike Silagadze, founder of ether.fi, questioned both the substance and the process, noting that the proposal was made public with just 48 hours for comments and that it would benefit large centralized entities at the expense of individual stakers. Silagadze also warned that the measure could return tens of billions of dollars in ETH to the market.
The proposal was submitted days before the August 6 deadline to be included in Hegotá, Ethereum’s next upgrade scheduled for the second half of 2026. With just around 300 lines of implementation and no consensus among validators and stakers, analysts consider it more likely that the proposal will be pushed back to a later fork.
