Ethereum Seeks Balance with Tapered Staking Rewards Burn Proposal
On August 4, Ethereum researchers and developers submitted a draft proposal to burn staking rewards, aiming to curb overconcentration of staked ETH and dilution of non-stakers.
The Tapered Issuance Burn plan would gradually increase the percentage of validator rewards destroyed as the amount of staked ETH grows. It targets 100% burn once staking hits around 60.25 million ETH, roughly half the total supply, effectively ending net staking issuance.
Currently, validators earn a positive yield regardless of how much ETH is staked, attracting more stakers and exacerbating overconcentration risks, according to the authors. They estimate that if left unchecked, these compounding issues could lead to reduced community accountability and increased competition for rewards among solo stakers.
The proposal would not affect existing staked ETH but change how new validator rewards are paid out, with a growing slice being destroyed instead of credited to validators' balances every 6.4 minutes. At today's staking levels, about 56% of each reward would already be burned under the formula.