Ethereum Issuance Policy Left to Ecosystem Process

The Ethereum Foundation's Protocol cluster has made its stance on the Ethereum issuance policy clear. According to the cluster, the policy belongs in a broader ecosystem process than fork scoping. This decision comes as part of their assessment of proposals for the Hegotá upgrade.

In their September 7 assessment, the EF Protocol graded EIP-8363, a proposal to burn part of validators' issuance rewards, as declined for inclusion in its own priorities. However, the cluster reserved judgment on the proposal's merits and called for a broader ecosystem process, stating that policy affecting stakers, holders, and the network's security budget requires participation beyond EF Protocol.

The current issuance policy involves new ETH being issued to validators, which expands the supply against which every holding is measured. This leaves unstaked holders exposed to dilution without receiving the issuance rewards that compensate validators. Stakers experience dilution but receive issuance in return for participating in consensus and retaining associated risks.

Currently, about 35% of Ethereum's total supply is staked. The cluster has proposed a reward cut, which would deduct and burn a fraction of idealized rewards for assigned consensus duties. This proposal remains a draft and would require further discussion within the ecosystem process.