A group of Ethereum researchers and developers, including Ethereum Foundation researcher Justin Drake, has proposed a policy change to alter validator rewards as the proportion of staked Ether increases. The draft, known as EIP-8363, would burn an escalating share of validators’ rewards as staked ETH approaches 60.25 million (approximately 50% of the current supply), with deductions reaching 100% at the threshold.
The proposal, which would phase in over 18 months, has drawn criticism from developers, stakers, and DeFi founders. Critics argue it could disproportionately affect solo validators and disrupt DeFi markets. Aave founder Stani Kulechov warned the plan could weaken institutional demand for ETH, while Ether.Fi CEO Mike Silagadze said it would push out solo stakers who lack subsidies from the Ethereum Foundation or other entities.
Under the current issuance model, staking yields never fall below 1.5% even if all ETH is staked. The proposed changes would peak at 0.5% of the supply annually (around 20% staked) before declining to zero at the 60.25 million ETH threshold. Grayscale’s Zach Pandl supported the idea of limiting staking incentives, but others, including co-author of prior Ethereum proposals Greg Koumoutsos, criticised the timeline for review as overly rushed.
Projections suggest that more than 55% of Ethereum’s supply could be locked in staking by 2028, with the proportion of staked ETH already surpassing 33% in April. The selection process for Hegotá, a proposed upgrade, may continue until November 8, though the exact date of a deadline for pull requests remains unspecified.
Whether the proposal will be approved, integrated into Hegotá, or achieve its stated goals—reducing dilution and promoting neutrality—remains uncertain. Research into its impact on solo versus institutional validators is ongoing, and the effectiveness of the policy in curbing issuance is debated.
Written by Sarah Whitmore
Ethereum Desk
