Ethereum Researchers Propose Tapering Staking Rewards to Zero

A new Ethereum Improvement Proposal (EIP) has been put forward by researchers to gradually reduce staking rewards to zero as ETH's supply becomes increasingly staked. EIP-8361, known as Tapered Issuance Burn, proposes that validators' rewards would be burned at an increasing rate as more ETH is staked.

The plan aims to remove what its authors call a permanent incentive for additional ETH to enter staking, even when the security benefits may be limited. The researchers estimate that if demand continues under the existing reward structure, over 70 million ETH could be staked by January 2028.

To mitigate potential disruptions, an 18-month transition period is proposed, during which Ethereum's base reward factor would temporarily rise before gradually returning to its current level. This adjustment aims to keep validator yields near their existing range during the early phase of the tapered burn.