Ethereum Proposal Seeks to Cap Staking at 50% Supply

A proposal has been put forth to cap Ethereum staking at 50% of its supply. The plan, known as EIP-8361, aims to reduce staking incentives by burning part of validator rewards as staking participation rises. Proponents argue that this would eliminate the 'artificial yield floor' and let the market decide on staking rewards based on risk.

Ethereum developer Jerome de Tychey announced the proposal alongside contributors Pintail, Dapplion, Pa7x1, Ladislaus0x, and Justin Drake. According to de Tychey, the current reward curve could lead to more than 70 million ETH being staked by January 2028, representing over 55% of supply.

Supporters argue that reducing issuance could protect ETH holders from dilution and prevent liquid tokens from becoming the dominant form of ETH exposure. However, critics argue that lowering rewards could hurt solo stakers and reduce activity across DeFi applications that rely on staking-based strategies.