Ethereum Consensus Layer Rewards Plummet to 2.8%

The Ethereum consensus layer rewards have been affected by the rapid growth of validators on the network. As the validator set reaches 2.1 million this month, the consensus layer yield has fallen to 2.8%. This drop in yield is due to more ETH being staked, which means a lower per-validator issuance.

The protocol uses an inverse square root curve to determine rewards, ensuring that if more validators join, the per-validator reward decreases. The base reward depends on the total amount of staked ether and a base reward factor of 64. A validator that performs all duties receives 64/64 of the base reward.

Validators also earn an inclusion delay reward based on how many slots separate the block proposal and attestation. To mitigate these risks, developers proposed EIP-7514 to cap the epoch churn limit at 8, limiting new validator activations to 1,800 per day.