The share of ETH supply staked has climbed to 34%, up from about 29% at the start of the year. A newly filed Ethereum proposal, EIP-8361, would burn a growing share of validator rewards as that ratio rises, cutting projected staking yield and pressuring ETH treasury firms that depend on it.
The share of ETH supply staked has climbed to 34%, up from about 29% at the start of the year. With staked supply reaching one-third of total Ethereum supply, questions have emerged about the sustainability of native yield on Ethereum.
A proposal to cap staking's growth
On Aug. 4, researchers including Ethereum Foundation's Justin Drake filed EIP-8361, a "tapered issuance burn" that destroys a growing share of validator rewards as the staking ratio rises. The burn reaches 100% once staked supply hits half of its current level, zeroing out net issuance for validators beyond that point.
At today's roughly one-third staking ratio, the authors' own modeling puts annual consensus yield falling from about 2.6% to 1.2%, phased in over 18 months rather than all at once. The current issuance model never fully switches off the marginal incentive to stake more, and the authors argue that pulls in centralized operators, exchanges and custodians at the expense of solo validators, while non-staking holders get diluted regardless.
Treasury firms among the most affected
ETH treasury companies such as Bitmine and Sharplink stand to be among the most directly affected. At current staking levels, revenue would be cut by half, with further worsening as the ratio climbs toward 50%.
Ethereum treasury firms differ from their Bitcoin counterparts precisely because of the native yield generated through staking and securing the network. Should these incentives shrink, investors may find less reason to pay a premium for ETH treasury vehicles over simply holding staked ETH, narrowing the structural case that has set ETH digital asset treasuries apart from Bitcoin ones.
Source: The Block
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