Ethereum's EIP-8361 Proposes Gradual Reduction of Staking Rewards

Ethereum researchers have proposed a new issuance model that would gradually reduce consensus-layer staking rewards as more ETH is locked in staking, aiming to slow the network's long-term inflation.

The proposal, EIP-8361, would burn an increasing share of newly issued validator rewards rather than distributing them to stakers. At today's staking ratio, its authors estimate that permanent consensus yields would fall from around 2.6% to 1.2% if adopted, with the change introduced gradually over 18 months.

The proposal introduces a mechanism known as a tapered issuance burn. Under EIP-8361, Ethereum would continue to calculate validator rewards using the existing issuance formula, then automatically burn a growing share of those rewards as the share of ETH staked increases. The burn would become larger as staking participation rises.

The proposal estimates that once roughly 50% of Ethereum's total supply is staked, the burn would offset the entire consensus-layer reward earned by a validator meeting normal performance requirements. However, validators would still receive additional rewards outside the protocol's consensus issuance, such as priority transaction fees and maximal extractable value (MEV).