TechEthereum Proposal Aims to Zero Out Issuance at $112 Billion Staked ETH

Draft EIP-8361 suggests burning a larger portion of validator rewards as staking increases.

By Shaurya Malwa|Edited by Omkar Godbole Aug 5, 2026, 5:49 a.m. 3 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Ethereum proposal aims to zero out issuance at $112 billion staked ETH. (Ethereum)SummaryShow
  • A new initiative from six leading Ethereum researchers proposes to gradually burn an increasing portion of validator rewards as more ETH is staked, aiming for a complete burn at approximately 60.25 million ETH, which represents about half of the total supply.
  • The objective is to limit staking profitability, addressing worries that escalating yields could funnel ETH into large exchanges and staking services, thereby compromising decentralization and security.
  • This plan, which would unfold over roughly two years and only affect newly minted ETH while keeping transaction fees and tips intact, has sparked debate among developers and DeFi stakeholders, with potential exclusion from the upcoming Hegotá upgrade.

Ethereum researchers and developers have proposed a gradual increase in the burning of validator rewards as the staking ratio rises.

The full burn would occur when approximately 60.25 million ETH (around half the total supply) is staked, which would drive net issuance down to zero and could enhance ETH’s long-term scarcity and value by minimizing dilution for existing holders.

Staking secures Ethereum by requiring holders to lock up their ETH and validate transactions, with the network rewarding them by creating new ETH. Validators receive these rewards, and burning refers to the permanent removal of coins instead of distributing them.

Every 6.4 minutes, at the end of an epoch, a portion of each validator's rewards is deducted and destroyed, with this proportion increasing linearly to 100% as staking approaches saturation.

Validators will continue to be compensated for their work and retain all transaction fees and tips earned from block creation. Only newly minted ETH will be subject to burning. The phase-in period for reward deductions will last 18 months, preceded by about six months of preparation as the upgrade is implemented, totaling approximately two years for adjustments.

The current issuance curve remains active, while the proposed one would reach zero at 50% staked ETH. (Shaurya Malwa/CoinDesk)

The proposal has been signed by six researchers, including Justin Drake from the Ethereum Foundation, and was submitted just ahead of the deadline for minor changes to be considered for Hegotá, Ethereum's next network upgrade.

The authors argue that staking yields persistently remain attractive. Even if all ETH were staked, the yield would still hover around 1.5%, incentivizing further staking.

Jérôme de Tychey, one of the authors, predicts that over 70 million ETH could be staked by January 2028 if no changes are made. Beyond a certain threshold, the proposal warns that excessive staking could weaken Ethereum’s security, as ETH would predominantly be held by exchanges and staking services instead of individual owners, which would marginalize smaller stakers.

Currently, about 41 million ETH is staked, representing nearly 34% of the supply, with an additional 2.5 million ETH in the activation queue, which has a wait time of six weeks or longer, with no users currently exiting.

Ethereum is nearing the level that the proposal considers a saturation point. (Shaurya Malwa/CoinDesk)

Ethereum regulates the rate at which validators can join or leave the network, creating queues for both directions. This mechanism prevents large groups from destabilizing the network by entering or exiting too rapidly. Currently, approximately 57,600 ETH can be activated daily.

The proposal has sparked division among Ethereum developers and market participants.

Aave Labs CEO Stani Kulechov commented in a blog post that reducing staking rewards to zero would undermine ETH borrowing strategies. Much of the ETH borrowed through Aave is utilized to acquire more staked ETH, according to data, a strategy that remains viable only while staking yields exceed borrowing costs.

Mike Silagadze, founder of the liquid staking protocol ether.fi, criticized both the process and the substance of the proposal.

"The EIP was released with only 48 hours' notice for comments," he stated on X, labeling it "a significant change in network economics with extensive implications for all of DeFi." He further argued that the change would "clearly disadvantage solo stakers without backing from the Ethereum Foundation or others" and would concentrate staking among "large centralized entities with no capital costs," predicting that "seven of the top 10 DeFi protocols" could experience capital flight.

Silagadze was more direct regarding the proposal’s potential impact on prices. "People who stake ETH typically do not sell it," he asserted, suggesting that the proposal "will prevent new ETH from being staked" and could lead to tens of billions of dollars’ worth of ETH returning to circulation.

The larger question remains whether this proposal will be incorporated into the Hegotá upgrade, which is scheduled for the latter half of 2026 and aims to address structural issues, improve censorship resistance, and reduce state size.

This fundamental shift in Ethereum’s monetary policy—tapering and ultimately eliminating staking rewards once 50% of the supply is staked—comes just days before the August 6 deadline for Hegotá inclusion. It is accompanied by a draft implementation of approximately 300 lines and lacks consensus among validators and stakers whose earnings it would diminish.

This combination significantly increases the likelihood that the proposal will not be included in Hegotá and will instead be deferred to a later fork. The authors acknowledge that each month of delay results in an increase of about 1.5 percentage points in the staking ratio.

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