Ethereum researchers have proposed a new issuance model that would gradually burn validator rewards and reduce them to zero once about half of ETH’s supply is staked.
Summary
- EIP-8361 would burn a growing share of validator rewards as Ethereum’s staking ratio increases.
- Rewards would reach zero near 60.25 million staked ETH, equal to roughly half the current supply.
- The draft proposes an 18-month transition period to limit abrupt changes in validator yields.
- EIP-8361 remains under community review and has not been approved for an Ethereum upgrade.
EIP-8361 would taper Ethereum staking rewards
Ethereum researchers Jérôme de Tychey, Justin Drake, dapplion, pintail, pa7x1, and Ladislaus von Daniels submitted EIP-8361 as a draft Core Ethereum Improvement Proposal.
Called Tapered Issuance Burn, the mechanism would destroy part of the rewards validators receive for attestations, proposing blocks, and participating in sync committees. The share burned would rise alongside the proportion of ETH committed to staking.
The burn rate would eventually reach 100% when about 60.25 million ETH is staked. Based on Ethereum’s current circulating supply of about 120.7 million ETH, that level represents close to 50% of all ETH. CoinMarketCap data placed the circulating supply at roughly 120.68 million ETH at the time of writing.
As a result, validators would no longer receive consensus-layer issuance rewards after staking reaches the proposed threshold. They could still earn other forms of revenue, including transaction priority fees and maximal extractable value.
Why Ethereum researchers want to change issuance
EIP-8361 seeks to remove what its authors describe as a permanent incentive for more ETH to enter staking, even when additional deposits may provide limited security benefits.
“The current issuance curve continues offering a yield of around 1.5% even if nearly all ETH is staked,” the authors wrote.
They added that “the remaining yield floor provides no point at which issuance stops encouraging additional staking.”
Under the draft model, annual ETH issuance would peak at approximately 0.5% of supply when the staking ratio reaches about 20%. Issuance would then decline as more ETH enters staking before reaching zero near the 50% threshold.
Ethereum’s staking ratio has already exceeded one-third of its supply. The proposal estimates that more than 70 million ETH could be staked by January 2028 if demand continues under the existing reward structure.
Transition would protect validator yields initially
The researchers proposed an 18-month transition rather than applying the permanent reward curve at once.
Ethereum’s base reward factor would initially rise from 64 to 128 before gradually returning to its current level. The temporary adjustment is intended to keep validator yields near their existing range during the early phase before the tapered burn becomes more restrictive.
For US validators and staking service providers, the proposal could change the economics of operating Ethereum infrastructure if developers eventually include it in a network upgrade. Lower issuance rewards could affect expected returns, although the draft would not alter US tax or securities rules governing staking.
The plan also follows a separate Ethereum research proposal reported by crypto.news in June. That mechanism, known as validator redirected revenue, would allow validators to direct between 0% and 10% of their staking income toward ecosystem funding.
Under that proposal, contributions would become mandatory if 51% of validators supported a redirect rate above zero. Its authors argued that shared funding could help pay for research, security, and public tools used across Ethereum.
EIP-8361 still faces community review
EIP-8361 is a draft and does not automatically change Ethereum’s monetary policy. It must move through technical review, community debate, and developer coordination before it can be considered for a future network upgrade.
The proposal has already drawn concerns that less predictable yields could affect solo validators, institutional staking operations, and decentralized finance strategies built around staked ETH.
ETH showed no clear reaction tied to the draft. The token traded near $1,878, up about 0.5% over 24 hours, with approximately $7.86 billion in trading volume at the time of writing, according to CoinMarketCap.
