Ethereum’s New Proposal Aims to Slow Down Staking Growth

A fresh proposal from Ethereum developers is stirring debate across the crypto community. Known as the Tapered Issuance Burn, and tracked as EIP-8363, the draft would gradually cut validator rewards as more ETH gets locked into staking.

What the Proposal Actually Changes

The plan, backed by six contributors including Ethereum Foundation researcher Justin Drake, targets a scenario where staked ETH approaches 60.25 million tokens, roughly half of today’s supply. As that threshold gets closer, a growing portion of staking rewards would be burned instead of paid out, eventually reaching a full cutoff. The rollout would happen gradually, spread across 18 months.

Why Developers Want the Change

Supporters argue that Ethereum’s current reward system never truly discourages staking, even if the entire supply ends up staked. Author Jérôme de Tychey believes unchecked issuance quietly dilutes every ETH holder and pushes people toward staking derivatives instead of holding plain ETH. Without adjustments, he warns that staking could climb past 55% of supply by 2028, weakening Ethereum’s image as a neutral, trustless asset. Grayscale’s research head Zach Pandl has also expressed support, suggesting reduced staking incentives could benefit ETH’s price long term.

Pushback From the Crypto Industry

Not everyone agrees. Aave founder Stani Kulechov believes slashing rewards could hurt institutional interest in ETH and slow DeFi lending activity. Ether.Fi CEO Mike Silagadze warns smaller, independent validators could be squeezed out first, leaving staking dominated by large, well-funded players. Some community members also flagged concerns about a rushed review window, though organizers clarified the Aug. 6 date only affects new proposal submissions, not final decisions.

EIP-8363 has not been approved or scheduled for Ethereum’s upcoming Hegotá upgrade. According to community organizer Trent Van Epps, discussions could continue until November, with Hegotá expected to reach mainnet sometime in the second quarter of 2027.