Ethereum Foundation member Justin Drake and other developers have introduced a new proposal called EIP-8361, aimed at changing the $ETH issuance policy on the Ethereum network. The proposal envisions a gradual reduction in the rewards paid to validators as the amount of staked $ETH increases, and the net staking yield dropping to zero after reaching a 50% staking share.
Under a mechanism called "gradual issuance burn," a specific portion of the theoretical rewards validators earn for performing duties would be deducted and burned each epoch. The percentage of burned rewards would increase from 0% to 100% in parallel with the amount of $ETH staked.
The proposal assumes that staking roughly half of Ethereum's supply would reduce validators' net staking yield to 0%. Considering the current staking rate, this is expected to approximately halve the yield, bringing it down to around 1%.
Jérôme de Tychey, one of the proposal's developers, stated that in April 2026, the percentage of Ethereum staked surpassed one-third of the total supply and continues to grow each month. He noted that under the current reward curve, even if all circulating $ETH were staked, the staking yield would not fall below approximately 1.5 percent.
De Tychey argued that the current system does not completely eliminate the incentive to increase $ETH staking. He pointed out that the validator queue has reached its maximum capacity, and at the current pace, approximately 1.75 million $ETH are being added to the staking system monthly.
According to published estimates, if no changes are made, the amount of staked $ETH could exceed 70 million by January 1, 2028. This figure corresponds to over 55% of Ethereum's total supply.
Supporters believe that excessively high staking rates can create risks rather than enhance Ethereum's security. They point out that taxes on nominal staking yield and the resulting supply reduction could cause individual validators to be the first group to exit the system.
It is argued that such a situation could lead to concentration of staked $ETH in custody companies and large staking service providers, potentially weakening Ethereum's decentralized structure. According to the developers, the concentration of the validator set under the control of certain institutions could also reduce the ability of Ethereum's social layer to intervene in a potential network fork.
Proponents of EIP-8361 also note that the constantly growing $ETH issuance creates dilution costs for investors not participating in staking. They argue that liquid staking tokens and other staking derivatives, with their high interest rates, could replace the direct use of $ETH within the ecosystem.
The proposed solution envisions a linear reduction of the staking yield by 50% up to a certain staking level. This aims to eliminate the economic incentive for increasing $ETH staking volume after reaching a certain level, limit $ETH issuance, and preserve Ethereum's monetary neutrality.
*This is not investment advice.
end-content
