A group of Ethereum researchers and developers has put forward a proposal to alter the network's issuance policy by burning a portion of the consensus rewards given to validators. The draft, titled EIP-8363, aims to implement this change.
Among the initiative's authors are Jerome de Tychey from the Lodestar Dapplion team, Ethereum Foundation researcher Justin Drake, and several other developers.
The proposal suggests that as the amount of ETH staked increases, the network will burn a larger portion of the rewards that validators earn from attestations, block proposals, and participation in synchronization committees. Once staking reaches 60.25 million ETH—approximately 50% of the current supply—the reduction will reach 100%.
These changes are intended to be implemented gradually over a period of 18 months. The authors believe this will eliminate the minimum yield for staking and reduce the incentive to lock up an increasing share of ETH.
Authors' Arguments
The EIP states that the existing issuance curve does not remove the incentive for staking even when a very high percentage of coins are locked. The authors estimate that the yield does not drop below roughly 1.5% annually, even with the entire ETH supply staked.
“The incentive for staking is never turned off. Where will it stop? Nowhere,” stated de Tychey.
The authors also caution that further growth in staking could lead to increased concentration of ETH among large custodians, exchanges, and liquid staking providers. Another risk identified is the potential displacement of regular ETH from DeFi by tokens like LST, which carry risks associated with specific issuers or smart contracts.
🚨 New EIP: Tapered Issuance Burn
— Jerome de Tychey 🦇🔊 (@jdetychey) August 4, 2026
We just submitted an EIP to ethereum/EIPs: a minimal, market-driven fix to Ethereum's issuance policy removing the incentive for stake growth beyond 50% of ETH supply.
EIP-8361 by @pintail_xyz, @jdetychey, @dapplion, @pa7x1, @ladislaus0x &… pic.twitter.com/g1uzWPycQ4
The document claims that burning part of the rewards will help maintain the neutrality of ETH as an asset and reduce the dilution of shares for holders who do not participate in staking.
“Constantly increasing issuance is a dilution tax for every holder: stake or be diluted,” de Tychey commented.
Criticism of the Proposal
The initiative has already faced backlash from developers, stakers, and founders of DeFi projects. Critics have warned that reducing rewards could adversely affect solo validators, diminish institutional demand for ETH, and impact markets related to staking yields.
Stani Kulechov, the founder of Aave, expressed that lowering rewards may weaken institutional interest in ETH and decrease borrowing activity in DeFi. He stated that the proposal “does not achieve the goal it aims for and is actually harmful to Ethereum.”
Unfortunately this proposal doesn't achieve the outcome it tries to achieve and is actually hurtful for Ethereum.
— Stani (@StaniKulechov) August 4, 2026
It caps Ethereum staking rewards to 0% when over 50% of supply staked.
What this means is that Ethereum staking yield becomes unpredictable and even fully… https://t.co/IYUst52Dt3
Mike Silagadze, head of Ether.Fi, believes the changes will hit solo stakers the hardest, as they typically face higher relative costs.
This is so disappointing on every level.
— Mike Silagadze🛡 (@MikeSilagadze) August 4, 2026
EIP released with 48 hours notice for comments. Realistically 4 months before it goes live. For a major network economics change with far-reaching implications for all of DeFi.
Every builder on Ethereum opposes this. Why is this a focus?… https://t.co/qQbCui8aju
“This is detrimental to decentralization, adoption of Ethereum, and the reputation of a network that implements changes in this manner. It strengthens the position of Ethereum critics who argue that the network is governed by a small group of insiders with no regard for real users and developers on-chain,” he emphasized.
De Tychey noted on the Ethereum Magicians forum that users of large staking providers incur fees and bear risks from intermediaries, so a decrease in yield would also make these services less appealing. However, he acknowledged that the impact of the changes on different groups of stakers remains a matter of debate.
Currently, EIP-8363 is still in draft form and has not been approved, scheduled, or included in the Hegota upgrade. The timing of the discussion has raised questions, as the document was released shortly before the deadline for submitting additional EIPs.
In June, Ethereum Research proposed allowing validators to redirect up to 10% of staking rewards toward ecosystem funding. Concerns at that time included the potential for collusion among validators, conflicts of interest between operators and ETH holders, and excessive issuance.