Ethereum Researchers Propose Tapered Issuance Burn to Combat Inflation

A group of six researchers has submitted a draft Ethereum Improvement Proposal to address the issue of inflation on the Ethereum network. The proposal, known as 'Tapered Issuance Burn', would burn a growing share of validator rewards in accordance with how much ETH gets staked.

The plan aims to address the fact that there is currently no point where the incentive to stake more ETH shuts off. The researchers propose deducting from the rewards validators already earn, and the deduction would grow as the staking ratio climbs.

When the staking ratio hits around half of all ETH supply, the deduction would reach 100%. This means that if the new system were to be implemented immediately, it would cut net consensus yield from about 2.6% to 1.2%, causing many stakers to exit.

Stani Kulechov, the founder of Aave, argued on X that capping staking rewards to 0% above 50% staked would make Ethereum yields unpredictable and uneconomical for institutional buyers who prefer predictable cash flows.