Justin Drake, an Ethereum Foundation researcher involved in shaping the network's technical roadmap, and five other authors have proposed cutting issuance-funded staking yield from about 2.6% to 1.2% at current participation levels, although the reduction would be phased in over 18 months.
- The proposal was submitted on Aug. 4 as an Ethereum Improvement Proposal that would burn a growing share of validator rewards as more ETH is staked.
- The draft has circulated as EIP-8361, although its current pull request says it remains unnumbered while awaiting review from EIP editors.
- And it hasn't been included in any planned Ethereum upgrade yet.
Under Ethereum's existing system, staking yield declines as more validators join, but the authors estimate it would remain near 1.5% even if nearly all ETH were staked.
As the authors argue, "dilution costs to unstaked ETH holders increase," while greater staking participation could push more of the supply into "a handful of exchanges, ETFs, and staking service providers."
The cut would arrive gradually
The proposal estimates that roughly 33% of ETH is currently staked and that immediately applying its permanent formula would cut consensus yield from about 2.6% to 1.2%.
And as the staking ratio rose, the protocol would burn a larger share of validator issuance until the deduction reached 100% at a 50% ratio.
Validators could still earn above 50%
Still, zero consensus yield wouldn't necessarily mean validators earn nothing. The proposal would leave transaction tips and maximum extractable value, or MEV, untouched. Its authors estimate those execution-layer payments currently provide up to about 0.2% annually.
They also said the 50% level was "not a target" and predicted staking would settle below it once returns no longer compensated validators for their risks.