Ethereum Staking Rewards Could Fall to Zero Under New Proposal

Ethereum researchers have proposed a new issuance model that would gradually burn validator rewards and reduce them to zero once about half of ETH's supply is staked.

The proposal, known as EIP-8361, would taper Ethereum staking rewards by destroying part of the rewards validators receive for attestations, proposing blocks, and participating in sync committees. The share burned would rise alongside the proportion of ETH committed to staking.

According to the draft, the burn rate would eventually reach 100% when about 60.25 million ETH is staked, which represents close to 50% of all ETH. At this point, validators would no longer receive consensus-layer issuance rewards after staking reaches the proposed threshold.

The authors argue that the current issuance curve continues offering a yield of around 1.5% even if nearly all ETH is staked, and that the remaining yield floor provides no point at which issuance stops encouraging additional staking.