Ethereum Researchers Propose Hard Cap on Staked ETH to Combat Centralization

A group of six researchers led by Justin Drake of the Ethereum Foundation has proposed a hard cap on the amount of ETH that can be staked. The proposal aims to burn validator rewards along a sliding scale, with the burn rate increasing as more ETH is staked. Once around 60.25 million ETH is staked, which is roughly half of all supply in existence, the burn rate will top out at 100%, leaving net issuance at zero.

The proposal argues that beyond a certain threshold, additional stake weakens Ethereum's security instead of strengthening it. The researchers claim that staking rewards would still hover around 1.5% even if every single ETH was staked. Jérôme de Tychey, one of the proposal's co-authors, forecasts that staking will exceed 70 million ETH by January 2028.

The proposal has sparked debate among developers and market participants. Some have expressed concerns that driving staking rewards down to zero would render ETH borrowing strategies largely unworkable. Others argue that the proposal would self-evidently push out solo stakers and deliver staking to large centralized entities with zero cost of capital.