Six Ethereum researchers and developers published a draft improvement proposal on Tuesday that would burn a growing share of validator rewards, removing the protocol’s issuance incentive to keep pushing staking above half of all ETH.
The authors are lead writer pintail, Ethereum France President Jérôme de Tychey, Ethereum core developer dapplion, pa7x1, and researchers Ladislaus von Daniels and Justin Drake.
How the draft would change validator rewards
Under the proposal, at each epoch boundary every validator would be charged a fraction of the idealized reward tied to each assigned duty, whether that duty is attestation, block proposal, or sync committee work. That portion of ETH would then be destroyed.
The fraction rises with total ETH staked and reaches 100% at a fixed 60,250,000 ETH, which the report describes as roughly half of the current supply. At that point, a validator that is performing as expected would see net consensus-layer issuance fall to zero.
The proposal does not touch execution-layer income. Fees and MEV would continue to flow.
Tradeoff between dilution and staking yield
For ETH holders, the draft frames the change as a tradeoff between dilution and yield. Issuance would peak near a 19.8% staking ratio and then decline, rather than continuing to climb without limit, capping the dilution paid by ETH holders who do not stake.
The cost would shift to stakers. If the burn were applied in full at today’s staking ratio, net consensus yield would fall from about 2.6% to 1.2%.
To ease that transition, the authors propose phasing the mechanism in by temporarily doubling the base reward factor to 128 and then bringing it back down to today’s 64 over roughly 18 months.
The shape of the reward curve, however, would apply from the first epoch after activation. That means any growth beyond a 50% staking ratio would stop receiving extra issuance incentive immediately.
Pushback from DeFi figures
The response from parts of DeFi has been sharply negative. Aave founder Stani Kulechov wrote that the proposal “doesn’t achieve the outcome it tries to achieve and is actually hurtful for Ethereum.”
ether.fi CEO Silagadze said the change would push out solo stakers who are not subsidized and leave staking to large centralized operators with no cost of capital.
Timing has become another point of criticism
Timing is also drawing objections. The draft appeared two days before the Aug. 6 deadline for submitting EIPs to the Hegota upgrade.
According to Unchained, the proposal is currently a draft.