Ethereum Developers Unveil Tapered Issuance Burn Proposal
Ethereum developers have submitted a new proposal to adjust validator rewards as more ETH enters staking. The draft, known as EIP-8361, introduces a reward burn mechanism designed to remove staking incentives once about half of Ethereum's supply is actively staked.
The proposed model would burn part of the rewards earned by validators for attestations, block proposals, and sync committee participation. Under this model, the burn rate would increase as Ethereum's staking ratio rises. The burn would eventually reach 100% when approximately 60.25 million ETH is actively staked, a level representing about half of the current ETH supply.
The authors argue that the current issuance curve continues to offer a yield of around 1.5% even if nearly all ETH is staked. They add that 'the remaining yield floor provides no point at which issuance stops encouraging additional staking.'