Ethereum Staking Rewards Could Hit Zero Under EIP-8361 Altcoin News ETHNews
- Advertisement -Six researchers filed a draft Ethereum proposal that burns validator issuance as more ETH gets staked. Net consensus rewards would fall to zero once staking reaches roughly half of the ETH. . .
- Advertisement -Six researchers filed a draft Ethereum proposal that burns validator issuance as more ETH gets staked. Net consensus rewards would fall to zero once staking reaches roughly half of the ETH supply. Aave founder Stani Kulechov warns the change would push capital toward rival networks. The draft arrived just ahead of the inclusion deadline for Ethereum’s Hegotá upgrade. A group of six Ethereum researchers, including the Ethereum Foundation’s Justin Drake and Ethereum France president Jérôme de Tychey,submitted a draft Core proposal on August 4that would gradually destroy validator rewards as the network’s staking ratio climbs, reducing new ETH issuance to exactly zero once about half of the total supply is locked in validators. The proposal,filed as EIP-8361and titled “Tapered Issuance Burn,” has already drawn public opposition from Aave founder Stani Kulechov, who argues that stripping the yield floor from staked ETH would damage institutional demand and hollow out a large chunk of decentralized finance built around ETH lending. 🚨 New EIP: Tapered Issuance BurnWe just submitted an EIP to ethereum/EIPs: a minimal, market-driven fix to Ethereum's issuance policy removing the incentive for stake growth beyond 50% of ETH supply. EIP-8361 by@pintail_xyz,@jdetychey,@dapplion,@pa7x1,@ladislaus0x&…pic. twitter. com/g1uzWPycQ4— Jerome de Tychey 🦇🔊 (@jdetychey)August 4, 2026The reward curve that never stops payingEthereum’s issuance schedule was designed so that staking yield shrinks as more validators join, but it was never designed to reach zero. Even if nearly the entire supply were staked, the current curve keeps paying validators roughly 1. 5% a year. The authors of EIP-8361 treat that floor as the whole problem, because there is no participation level at which the protocol stops rewarding additional stake. The numbers are moving fast. Ethereum’s staking ratio passed one-third of total supply in April 2026 and has kept rising every month, while the validator entry queue runs at maximum churn, absorbing close to 1. 75 million ETH per month. On the authors’ own conservative math, more than 70 million ETH could sit staked by January 2028, pushing the ratio above 55% of supply. Their worry reaches past dilution into who holds the stake: as custodians, ETF issuers, and liquid staking providers such as Lido control an ever-larger slice, the people who actually own the asset lose the ability to hold those operators accountable, and solo home stakers get squeezed out. How the burn eats into validator pay every 6. 4 minutesThe mechanism leaves the reward formula alone. It calculates a validator’s idealized reward exactly as the protocol does now, then deducts and permanently destroys a slice of it before it lands, once every epoch, which closes every 6. 4 minutes. How deep that shave goes depends on a new parameter the authors call SATURATION_BALANCE, set at roughly 60. 25 million ETH. As total active stake approaches that figure, the burned fraction climbs from 0% to 100%, and a well-behaved validator ends up earning nothing at all from consensus issuance. A built-in 18-month transition temporarily doubles the base reward factor before the burn tightens, and with the roughly six-month lead time to a fork, operators would have close to two years to adjust. Stake levelIssuanceNet yield~33%todaySmall deduction begins2. 6% → 1. 2%40–49%Burn grows every epochnearing 0%~50%60. 25M ETHBurn hits 100%0%At 50% staked, validators keep only tips, priority fees and MEV. Yield figures per the draft’s own estimate. Stani Kulechov: the only reason left to borrow ETH would be to short itKulechov, who runs the largest lending protocol on Ethereum,dismissed the proposal in blunt terms, writing that it fails to achieve its goal and is actively harmful to the network. His reasoning splits two ways. A buyer weighing an ETH position against networks with predictable cash flows now has to price in the risk that yield could vanish, an uncertainty he says carries a real adoption cost. On the DeFi side, taking ETH yield to zero guts the lending and borrowing use cases that liquid staking tokens like stETH depend on. He put the irony plainly: with rewards gone, the main reason anyone would still borrow ETH is to short it. My thoughts on Ethereum staking yield axinghttps://t. co/J9Taoyiio3tl;dr Save ETH staking. — Stani (@StaniKulechov)August 4, 2026His objection is one of four running through the community response. DeFi and liquid stakingZero issuance makes stETH-style products hard to price and undercuts fixed-yield lending. Solo stakersA near-48% income cut at activation hits home validators hardest, favoring operators with custom MEV setups. Tax exposureThe doubled base reward factor can push taxable income well above a staker’s shrinking payout. Capital flightWith stablecoins paying 4-5%, near-zero ETH yield could send capital to Solana and rival chains. Falling DEX volume gives the yield worry sharper teethThe timing lands on top of a soft activity picture. CryptoRank data showsEthereum’s on-chain spot trading volume fell to about $29 billion in July, down 76% from its August 2025 record of $122 billion and back to October 2023 levels. Volume has slid by an average of 12. 5% a month, and at that pace CryptoRank projects a five-year low near $21. 2 billion within roughly three months. That backdrop feeds the capital-flight argument directly, because execution-layer income, the stream validators would lean on once issuance hits zero, depends on the very usage and fees that are drying up. Source: CryptoRank, DefiLlamaThe deadline that has developers pushing backEIP-8361 arrived days before the deadline for non-headliner proposals to be weighed for Ethereum’s Hegotá upgrade, and several developers have flagged that timing as a problem, questioning whether a change this fundamental can get proper review on that clock. For now the draft holds no confirmed upgrade slot and sits in open discussion on theEthereum Magicians forum, needing core developer buy-in and client-team analysis before it comes anywhere near a fork. Disclaimer: ETHNewsdoes not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. 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