Ethereum Proposal Would Taper Staking Issuance to Zero Once About Half of ETH Supply Is Staked

Ethereum researchers and developers have floated a plan to increasingly burn validators' newly issued rewards as the amount of ETH staked rises, ultimately driving net issuance to zero. Under the draft, the burn rate would ramp up linearly and reach 100% when staking hits the proposed saturation point of roughly 60.25 million ETH—about 50% of total supply. At that stage, newly created ETH that would normally be paid out as staking rewards would instead be destroyed, a change the authors say could reinforce ETH's long-term scarcity by limiting dilution for existing holders. Staking is central to Ethereum's security model: holders lock ETH and run validator software to confirm transactions. The network compensates validators by issuing new ETH, alongside the transaction fees and tips earned for proposing blocks. The proposal does not change fee and tip income; it targets only the newly created ETH. Every 6.4 minutes, at the end of an Ethereum "epoch," a portion of each validator's issuance would be deducted and burned, with that portion increasing as total staking approaches the cap. The change would be phased in slowly. The authors outline an 18-month ramp, plus roughly six months for the upgrade to ship, giving the ecosystem close to two years to adjust. Six researchers signed the proposal, including Ethereum Foundation researcher Justin Drake. It arrived days before the cutoff for smaller changes to be considered for Hegotá, Ethereum's next network upgrade. The authors argue the current staking design keeps paying indefinitely. They estimate that even if all ETH were staked, yield would still hover near 1.5%, leaving persistent incentive to add more stake. One co-author, Jérôme de Tychey, forecasts more than 70 million ETH staked by January 2028 if nothing changes. Beyond a certain level, the proposal says, additional staking can weaken security by concentrating ETH with exchanges and staking providers and squeezing out smaller solo stakers. Ethereum currently has about 41 million ETH staked, or close to 34% of supply. Trackers show another 2.5 million ETH waiting in the activation queue, implying waits of six weeks or more, with little sign of exits. Ethereum rate-limits how quickly validators can join or leave to prevent large blocs from destabilizing the network; both entry and exit therefore form queues. At present, roughly 57,600 ETH per day can activate. Reaction across the ecosystem has been split. Aave Labs CEO Stani Kulechov wrote that pushing staking rewards toward zero would make many ETH borrowing strategies largely unworkable. Data indicate a significant share of ETH borrowed on Aave is used to buy more staked ETH, a trade that depends on staking yield exceeding borrowing costs. Mike Silagadze, founder of liquid staking protocol ether.fi, criticized both timing and substance. On X, he said the EIP was posted with just 48 hours' notice for comments despite being "a major network economics change" with broad implications for DeFi. He argued it would "self evidently push out solo stakers" and leave staking dominated by "large centralized entities with zero cost of capital," warning that "seven of the top 10 DeFi protocols" could see capital leave. Silagadze also framed the proposal as bearish for staking growth, saying stakers typically do not sell and arguing the change could halt new staking demand and potentially return tens of billions of dollars of ETH to circulation. A key uncertainty is whether the proposal can make Hegotá at all. The planned upgrade, targeted for the second half of 2026, is expected to focus on structural cleanup, censorship resistance, and reducing state size. The proposed shift in Ethereum monetary policy—tapering and eventually eliminating consensus-layer issuance once 50% of supply is staked—arrived only days before the Aug. 6 inclusion deadline for Hegotá and is backed by a roughly 300-line draft implementation with no clear consensus among validators and stakers whose yields would be reduced. That combination makes inclusion in Hegotá less likely than a slip to a later fork. The authors note that each month of delay could allow the staking ratio to climb by about another 1.5 percentage points.