Ethereum Proposes Gradual Reduction in Staking Rewards to Curb Inflation
Ethereum researchers have proposed a new issuance model to curb long-term inflation by reducing staking rewards. The proposal, EIP-8361, would burn an increasing share of newly issued validator rewards as more ETH is locked in staking.
Under the proposal, Ethereum would continue to calculate validator rewards using the existing issuance formula, then automatically burn a growing share of those rewards as the share of ETH staked increases. The burn would become larger as staking participation rises.
The change would be phased in over approximately 18 months, allowing staking rewards to decrease gradually. At Ethereum's current staking ratio of approximately 33%, the proposal estimates that permanent consensus-layer yield would decline from around 2.6% to roughly 1.2%.