A group of Ethereum contributors has proposed EIP-8361 to reduce staking incentives, aiming to prevent more than 50% of ETH supply from being locked by validators. The plan would gradually burn validator rewards as staking participation rises, eventually dropping yield to zero at a 50% staking ratio. Proponents argue the move protects holders from dilution and lets the market decide rewards. Critics, including Aave’s founder and Ether.fi’s CEO, say it could hurt solo stakers and reduce DeFi activity by making staking-based strategies less attractive. A heated community debate has followed.
On August 4, Ethereum developer Jerome de Tychey announced the submission of EIP-8361, titled “Tapered Issuance Burn,” alongside contributors including Pintail, Dapplion, Pa7x1, Ladislaus0x, and Justin Drake.
In a series of posts on X, de Tychey argued that Ethereum’s current staking model has no point where incentives naturally slow down. He noted that the staking ratio passed one-third of the ETH supply in April 2026 and continues to rise.
“The incentive to stake never switches off. Where does it stop? It doesn’t,” he wrote. According to him, the current reward curve could lead to more than 70 million ETH being staked by January 2028, representing more than 55% of supply.
The proposal would burn part of validator rewards as staking participation rises, with the burn rate increasing to 100% when around half of the ETH supply is staked. De Tychey said the goal is to eliminate the “artificial yield floor” and let the market decide on staking rewards.
The reaction from the community has been divided. Lawyer Gabriel Shapiro criticized the proposal, calling it “a huge distraction” from efforts that could increase demand for ETH.
Aave founder Stani Kulechov stated that Ethereum should concentrate on privacy, scaling, security, stablecoins, decentralized finance, and real-world assets instead of decreasing staking rewards. Ether.fi’s Mike Silagadze opposed the proposal, saying lowering rewards could hurt solo stakers and reduce activity across DeFi applications that rely on staking-based strategies.
A CryptoQuant report from July pointed to record staking levels, with around 40 million ETH locked by validators. Supporters of EIP-8361 argue that reducing issuance could protect ETH holders from dilution and prevent liquid tokens from becoming the dominant form of ETH exposure. One supporter, MilliΞ, wrote that if everyone stakes, the effective yield approaches zero because everyone owns the same share of supply.
