Ethereum Withdraws Proposal to Burn Staking Rewards in Hegotá Upgrade

The Ethereum Foundation has withdrawn a proposal to burn staking rewards in the upcoming Hegotá upgrade. The proposal, EIP-8363, aimed to reduce the amount of new Ether (ETH) issued by validators as more ETH is staked. According to the proposal, the burn fraction would rise with the staking ratio until it reaches 100% at a fixed saturation balance, which is half the ETH supply.

The proposal's authors, including Co-proposer Jérôme de Tychey, argued that the change was urgent due to the increasing staking ratio. They estimated that more than 70 million ETH, or over 55% of the supply, could be staked by January 1, 2028. However, the proposal faced opposition from key stakeholders, including Aave founder Stani Kulechov and Lido contributors, who argued that reducing staking rewards could discourage smaller independent stakers.

The proposal's authors acknowledged the political problem and the need for a separate issuance-policy process. They plan to advance those discussions during the November Devcon, although a specific successor proposal or confirmed Devcon agenda item has not been established.