Ethereum Proposal Aims to Burn Staking Rewards at Half Supply

Ethereum developers have proposed a new solution to address the growing staking queue and reduce the issuance of new ETH. The proposal, EIP-8361, would implement a tapered issuance burn that would cancel staking rewards entirely at half the supply staked.

The current staking ratio has already passed a third of supply in April, with the validator entry queue saturated at maximum churn. According to co-author Jérôme de Tychey, a worst-case scenario puts more than 70 million ETH at stake by January 2028, north of 55% of supply.

The proposal would introduce a fixed saturation balance of 60.25 million ETH, roughly half the supply at the time of the fork. The burn fraction would scale with the staking ratio raised to the power of 1.5, hitting 100% at that balance. This means validators performing their duties perfectly would earn zero net consensus yield.

The proposal's authors argue that this change is necessary to prevent dilution and reduce the risk premium demanded by stakers. However, some experts have expressed concerns about the complexity of the proposal and its potential impact on the network's security.