A group of six Ethereum researchers, including Ethereum Foundation’s Justin Drake, published a draft proposal on August 5 that would burn an increasing fraction of validator consensus rewards as staked ETH approaches 60.25 million ETH, reaching 100% deduction at that threshold over 18 months.
The proposal, EIP-8363, is titled Tapered Issuance Burn. It targets a fixed ceiling on staking participation: 60.25 million ETH represents roughly 50% of Ethereum’s current supply. The mechanism would phase in reward cuts gradually as staking approaches that level, with full elimination once the threshold is crossed.
Jérôme de Tychey, the proposal’s lead author, framed the change as a defense of Ether’s monetary properties. “Ever-growing issuance is a dilution tax on every holder: stake, or be diluted. At high ratios, LSTs and other staking derivatives displace raw ETH as the ecosystem’s working money, thus swapping the most neutral, trustless asset for intermediated claims on issuers,” de Tychey said.
De Tychey added that without intervention, staking incentives lack a natural stopping point. “The incentive to stake never switches off. Where does it stop? It doesn’t,” he said.
Staking share passed 33% in April 2026. Under current issuance curves, the network offers a minimum staking yield of 1.5%, with peak issuance at 0.5% of ETH supply per year when the staking ratio reaches 20%. The proposal’s authors argue that unchecked issuance erodes Ether’s credibility as a store of value.
Community Opposition
The proposal has drawn sharp criticism from major staking ecosystem participants. Stani Kulechov, founder of Aave, said the proposal “doesn’t achieve the outcome it tries to achieve and is actually hurtful for Ethereum.”
Mike Silagadze, CEO of Ether.Fi, warned that cutting rewards would concentrate staking among large institutions. “This will self evidently push out solo stakers who aren’t subsidized by the EF or others. It will essentially guarantee that the only ones staking are large centralized entities with zero cost of capital where users passively hold their ETH,” Silagadze said.
Greg Koumoutsos, co-author of EIP-8148 and EIP-8205, raised procedural concerns. “This clearly doesn’t leave adequate time for community review of a monetary policy change of this magnitude,” Koumoutsos said.
Timeline and Approval Status
EIP-8363 was published two days before the August 6 deadline for pull requests proposing additional EIPs for Ethereum’s Hegotá upgrade. The August 6 date marks the cutoff for new proposal submissions, not a decision point on inclusion.
The selection process for which proposals will be included in Hegotá could continue until November 8, 2026. Hegotá is expected to reach mainnet in Q2 2027. The proposal has not been approved or scheduled for inclusion in any upgrade.
De Tychey disputed claims that reward cuts would disproportionately harm solo validators, arguing that users of large staking providers must pay fees, making those services less attractive as rewards decline. He acknowledged that research on this dynamic remains contested.
Without intervention, modeling suggests more than 55% of Ethereum’s supply could be locked in staking by 2028, according to the proposal’s authors.
