New Ethereum Proposal Aims to Eliminate Issuance if Staked ETH Hits $112 Billion

New Proposal Targets ETH Issuance Levels

A recent proposal from six Ethereum researchers aims to dramatically alter the issuance of ETH based on staking levels. The draft, known as EIP-8361, suggests that Ethereum should gradually burn a rising share of validator rewards as more ETH is staked. The full burn would occur once approximately 60.25 million ETH – about half of the total supply – is staked, thus driving net issuance to zero.

Implications for Staking and Validator Rewards

The process of burning coins involves permanently destroying them instead of distributing them as rewards to validators. Under this proposal, every 6.4 minutes, as Ethereum closes an epoch, a fraction of each validator’s rewards would be deducted and destroyed. This fraction would increase linearly to 100% as staking approaches saturation, which the proposal defines as half the total ETH supply.

Current Staking Landscape

Currently, there are about 41 million ETH staked, representing roughly 34% of the total supply. An additional 2.5 million ETH is waiting to be activated. As more ETH gets staked, the proposal raises concerns about network security, suggesting that an excess of staked ETH could lead to it being held largely by exchanges and staking services rather than individual holders.

Criticism from the Ethereum Community

The proposal has stirred debate within the Ethereum community. Critics, including Aave Labs CEO Stani Kulechov, warn that moving staking rewards toward zero could undermine borrowing strategies reliant on staking yields. Similarly, Mike Silagadze, founder of ether.fi, criticized the proposal for its late notice and far-reaching economic implications, highlighting concerns that it could disadvantage small individual stakers in favor of larger institutional entities.

Looking Ahead

As the authors prepare for integration into Ethereum’s next network upgrade, known as Hegotá, scheduled for the second half of 2026, there remains uncertainty about whether this proposal will be included. Notably, it arrived just days before the inclusion deadline and is still lacking consensus among validators and stakers. If implemented, this fundamental change to Ethereum’s monetary policy could reshape the staking landscape significantly.