Six Ethereum researchers have put forward draft proposal EIP-8361, a change that would steadily burn a larger share of newly issued validator rewards as more ETH is staked. At about 60.25 million ETH staked, roughly half of total supply, the burn rate would reach 100%, taking net issuance to zero.
The proposal is meant to place a practical cap on staking by making additional stake less profitable. Its authors argue that if staking keeps paying at all levels, more ETH will keep moving into large exchanges and staking providers, weakening decentralization and network security.
How EIP-8361 would work
Under the draft, Ethereum would linearly raise the share of validator rewards that gets burned as the staking ratio climbs. Once staking reaches about 60.25 million ETH, the amount of newly issued ETH paid to validators would be fully burned.
The proposal only affects newly issued ETH. Transaction fees and tips would remain untouched. Validators would still do the same work and receive rewards through the same process, but at the end of each epoch, part of those rewards would be deducted and destroyed rather than paid out. An Ethereum epoch lasts about 6.4 minutes, and the burned share would keep rising as staking moves toward the saturation point, eventually reaching 100%.
If that threshold is reached, net issuance would fall to zero. Supporters of the change say that could limit further dilution for existing holders and support ETH’s long-term scarcity and valuation.
Two-year adjustment period and a narrow upgrade window
The rollout is designed to be gradual. The deduction from validator rewards would be phased in over about 18 months, with roughly six months before that while the upgrade is shipped. That leaves the market about two years to adjust.
The timing is tight. The proposal was signed by six researchers, including Ethereum Foundation researcher Justin Drake, and it appeared only days before the deadline for smaller changes to be considered for Hegotá, Ethereum’s next planned network upgrade.
Hegotá is scheduled for the second half of 2026 and is focused on structural cleanup, censorship resistance, and reducing state size. EIP-8361 is different in scope. It would alter Ethereum’s monetary policy by tapering and eventually zeroing consensus-layer staking rewards once 50% of supply is staked.
The draft is arriving just days before the Aug. 6 inclusion deadline for Hegotá. It comes with only a roughly 300-line draft implementation and no consensus among validators and stakers whose yields would be reduced. On that basis, the proposal appears more likely to miss Hegotá and move to a later fork than to ship in this upgrade. The authors themselves note that every month of delay allows the staking ratio to rise by about another 1.5 percentage points.
Why the authors think staking should not grow without limit
Staking is central to Ethereum’s security model. ETH holders lock coins and run software that validates transactions, and the network pays them by creating new ETH. Those participants are validators, and the newly created ETH is their reward. Burning means those coins are permanently destroyed instead of distributed.
The authors say the core issue is that staking never stops paying. Even if every ETH were staked, the yield would still be near 1.5%, which means there is always an incentive to add more.
Jérôme de Tychey, one of the proposal’s authors, projects that more than 70 million ETH could be staked by January 2028 if nothing changes. Beyond a certain point, the proposal says, extra stake makes Ethereum less secure rather than more secure because ETH ends up concentrated with exchanges and staking providers instead of its owners, while smaller solo stakers get squeezed out.
About 41 million ETH is staked today, close to 34% of supply. Another 2.5 million ETH is waiting in the activation queue, according to trackers, with a wait of six weeks or more, and nobody is currently lining up to leave.
Ethereum limits how quickly validators can join or exit, so queues form in both directions. The cap exists to keep a large bloc from entering or leaving fast enough to destabilize the network. The entry queue refers to ETH waiting to start staking, and the exit queue refers to ETH waiting to stop. At present, about 57,600 ETH can be activated each day.
Pushback from Aave and ether.fi
The draft has already split Ethereum developers and market participants.
Aave Labs CEO Stani Kulechov said in a blog post that pushing staking rewards toward zero would make most ETH borrowing strategies unviable. Data shows that much of the ETH borrowed on Aave is used to buy more staked ETH, a trade that works only while staking yields stay above borrowing costs.
Mike Silagadze, founder of liquid staking protocol ether.fi, objected both to the substance of the plan and to the process behind it.
He wrote on X, "EIP released with 48 hours notice for comments," calling it "a major network economics change with far reaching implications for all of DeFi."
Silagadze also said the proposal would "self evidently push out solo stakers who aren’t subsidized by the EF or others" and leave staking to "large centralized entities with zero cost of capital." He added that "seven of the top 10 DeFi protocols" would face a capital exodus.
On prices, he was even more direct. "People who stake ETH don’t sell it," he wrote, arguing that the proposal "will halt any new ETH getting staked" and could send tens of billions of dollars of ETH back into circulation.
Whether it reaches Hegotá remains unclear
The broader issue is whether EIP-8361 can make it into Hegotá at all. Based on the information disclosed so far, the planned 2026 upgrade is focused on cleanup and structural improvements, while this proposal would touch a much more basic part of Ethereum’s design: the economics of issuance and staking rewards.
Because the draft surfaced only days before the Aug. 6 cutoff, with a limited implementation and no broad agreement from the validators and stakers most directly affected, its path into Hegotá remains uncertain. For now, it looks more like a candidate for a later fork than a settled part of the coming upgrade.
Still, the authors argue that waiting has its own cost. In their view, every month that passes allows the staking ratio to climb by another 1.5 percentage points.