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Ethereum draft proposal would taper staking rewards as staked supply nears 50%

The EIP-8363 changes would progressively burn validator consensus rewards, with the deduction reaching 100% at 60.25 million staked ETH, and phase in over 18 months.

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Cointelegraph reports that six Ethereum researchers and developers, including Ethereum Foundation coauthor Justin Drake, have published a draft proposal, EIP-8363, aimed at changing the network’s issuance policy for staking rewards.

The proposal, also described as a Tapered Issuance Burn, would increase the fraction of validator consensus-layer rewards that are burned as the amount of staked ETH rises toward a fixed threshold of 60.25 million ETH, roughly 50% of the current ETH supply. At that point, the deduction would hit 100%, and the changes would be phased in over an 18-month period.

Cointelegraph adds that the draft has drawn backlash from developers, stakers, and DeFi founders who argue that reducing rewards could drive out solo validators ahead of larger institutions, weaken institutional demand for ETH, and disrupt DeFi markets that rely on staking yield.

The outlet also notes that the publication came just two days before a deadline for proposals tied to Ethereum’s Hegotá upgrade, raising timing concerns about whether tokenomics impacts can be fully considered before that deadline. The authors argue the current staking curve keeps staking yield from dropping below 1.5% even if all ETH is staked.

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