On August 4, six Ethereum (@ethereum) researchers and developers formally submitted a draft Ethereum Improvement Proposal that could fundamentally reshape how staking rewards work on the netw
On August 4, six Ethereum (@ethereum) researchers and developers formally submitted a draft Ethereum Improvement Proposal that could fundamentally reshape how staking rewards work on the network. The proposal, EIP-8361, titled Tapered Issuance Burn, was published by six researchers including Ethereum Foundation contributor Justin Drake.The draft was submitted days before an August 6 deadline for pull requests proposing EIPs for the Hegotá upgrade, though that date governs submissions, not final inclusion decisions.
The proposal would introduce a tapered issuance burn, deducting and permanently destroying a portion of validators' idealized rewards that scales with the network's overall staking ratio. The burn happens every epoch, roughly every 6.4 minutes. Crucially, only newly created rewards are affected. Validators would still be paid the same way for doing the same work and keep all transaction fees and tips they earn from building blocks. Only the newly created ETH gets burned.
The mechanism would bring net issuance to zero when staking reaches around 60.25 million ETH, equivalent to roughly half of the total supply.At the current staking level of roughly 33%, it would reduce annual yield from about 2.6% to approximately 1.2%. To soften the adjustment, the draft proposes an 18-month transition period to limit abrupt changes in validator yields.
The proposal extends a concept Ethereum already uses. The protocol currently creates new ETH to pay validators for securing the network, while EIP-1559 destroys a portion of base fees collected on every transaction. EIP-8361 applies similar burn logic directly to staking issuance.
The authors argue that Ethereum's current model keeps offering positive staking yields regardless of how much ETH is already staked, creating a persistent incentive for more capital to flow into staking. At 41.41 million ETH staked as of August 4, 2026, representing 33.98% of the total circulating supply, Ethereum's staking participation has already broken its own all-time high. The researchers believe unchecked growth risks greater concentration among large operators, more influence for exchanges and custodians, and ongoing dilution for ETH holders who do not stake.
The impact would not fall equally across participants. Analysis applying the proposal's own formula to Lido shows growth keeps paying the liquid staking provider until about 49 million ETH is staked, nearly 8 million more than today. Solo validators face a more immediate challenge: because downtime penalties remain unchanged while rewards shrink, recovering from temporary outages would take significantly longer than it does today.
The proposal does not touch Maximal Extractable Value (MEV), the additional income validators earn by ordering transactions inside blocks. That revenue stream would remain unchanged.
Critics of the proposal say the plan could negatively impact solo stakers, liquid staking tokens, DeFi yields, and Ethereum's long-term security.With just around 300 lines of implementation and no consensus among validators and stakers, analysts consider it more likely that the proposal will be pushed back to a later fork. For now, EIP-8361 marks the beginning of what is likely to be one of Ethereum's most significant monetary policy debates since EIP-1559.
Sources:The Block: Ethereum researchers propose burning validator rewards to cap staking at 50%CoinDesk: New Ethereum proposal would cut issuance to zero if staked ETH reaches $112 billionBeInCrypto: A New Ethereum Proposal Could Halve Staking Rewards: Who Feels It First?
