A new Ethereum proposal, EIP-8361, would burn a rising share of validator rewards as the staking ratio climbs, eliminating net consensus-layer issuance once half of ETH's supply is staked. Six developers, including the Ethereum Foundation's Justin Drake, published the draft on Aug. 4, two days before the deadline for EIPs targeting the Hegotá upgrade — and another developer has already objected to the timing.
EIP-8361, titled Tapered Issuance Burn, was published Aug. 4 by six authors including Justin Drake of the Ethereum Foundation and would destroy a growing share of validator rewards as the staking ratio rises, capping net issuance at zero once 50% of ETH is staked. Ethereum's current curve has no such ceiling: yield falls only with the inverse square root of the staking ratio and never drops below roughly 1.5%, so the incentive to stake more never fully switches off.
That floor matters because issuance drives almost all staking yield. About 33% of ETH is staked today, roughly 40 million ETH. The consensus layer pays about 1,054,000 ETH a year, or 2.62%, and issuance accounts for at least 93% of total staking yield once execution-layer rewards are added. Removing the floor, the authors argue, would let the market set the staking ratio instead of the protocol.
How the Burn Scales
Each epoch, every validator is charged a deduction on every duty — attestation, block proposal, sync committee work — whether or not the duty was performed, which keeps per-duty incentives intact. The burn fraction is total active balance divided by a new constant, SATURATION_BALANCE, raised to the power of 3/2. That constant is fixed at 60,250,000 ETH, about half the current 120.7 million supply — the point where consensus issuance hits zero. Applied immediately, that would cut net yield at today's ratio from about 2.6% to 1.2%. So the change phases in over 18 months instead.
Large Operators Feel It First
Under the current curve, an operator's income keeps rising with every validator it adds, at any size. The tapered burn caps total issuance around a 20% staking ratio and pushes it down beyond that. As a result, an operator holding half the stake would stop being paid for growth once about 31% of supply is staked. The authors frame this as protection against custodians, exchanges and ETF providers capturing the stake. Liquid staking protocols hold $34.9 billion. Lido alone holds $17.6 billion. ETH traded at $1,862 on Aug. 4, down 1.4% over the week.
Timing Draws an Objection
Developer Greg Koumoutsos wrote in an Ethereum Magicians forum thread that the draft landed 48 hours before the deadline to propose EIPs for the Hegotá upgrade, calling that inadequate time to review a monetary policy change of this scale. Aug. 6 is the deadline for pull requests proposing EIPs for Hegotá, and no pull request proposing EIP-8361 for inclusion had been opened as of publication. The proposal remains in Draft status and would require a hard fork.
Source: The Defiant
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