EIP-8361 targets zero validator rewards at 50% stake

• Ethereum (CRYPTO:ETH) researchers have published a draft improvement proposal, EIP-8361, that would gradually destroy an increasing portion of newly issued tokens received by validators as staking participation rises, with net consensus-layer rewards falling to zero once approximately half of the circulating ETH supply is staked.
• The proposal was authored by Jérôme de Tychey, Justin Drake, and several other contributors, who argue that the current reward formula risks excessive concentration of staked ETH among large operators and custodians.
• Under current conditions, approximately one-third of all Ethereum (CRYPTO:ETH) is staked, generating an annual consensus-layer yield of around 2.6%, with the existing formula continuing to incentivise additional staking even if nearly the entire supply were locked.

The authors project that without intervention, staked ETH could exceed 70 million tokens by early 2028, representing more than 55% of supply and potentially concentrating network control among a small number of large institutional operators.

The proposed burn mechanism calculates idealised rewards for each validator duty — attestations, block proposals, and sync committee work — exactly as currently, then permanently destroys a fraction of that amount determined by the ratio of current staking to a saturation threshold of approximately 60.25 million ETH, raised to the power of 1.5 and capped at 100%.

Annual issuance under the proposed permanent curve would peak near 0.5% of supply at a 20% staking ratio and decline toward zero at a 50% staking ratio.

Execution-layer income from transaction fees and maximal extractable value would remain entirely unaffected by the proposed changes.

To avoid a sudden shock to validator economics, the change would phase in over 18 months, with the base reward factor temporarily doubling at activation to keep initial net yields close to current levels before the burn takes fuller effect.

Supporters argue the mechanism would allow the staking market to find its own equilibrium where yield reflects actual risk, reduce unnecessary dilution for non-stakers, and reinforce Ethereum's (CRYPTO:ETH) scarcity properties.

Critics counter that sharply lower rewards could disadvantage solo stakers with higher operating costs relative to large operators, pressure liquid staking tokens and related DeFi strategies, and accelerate consolidation among the most cost-efficient validators.

The proposal arrived shortly before a deadline for consideration in the Hegotá upgrade and remains a draft, with community discussion continuing on forums and among client teams and no network upgrade scheduled at this time.

At the time of reporting, Ethereum price was $1,885.46.