Ethereum Researchers Propose Burning All Validator Rewards at 50% Staking Saturation
A group of six prominent Ethereum researchers has put forward a draft proposal that would fundamentally reshape the network's monetary policy by gradually burning an increasing share of validator rewards as more ETH gets staked — reaching a complete burn at approximately 60.25 million ETH, or roughly half the total supply.
The proposal, published as a draft Ethereum Improvement Proposal, was co-authored by Justin Drake of the Ethereum Foundation and Jérôme de Tychey, among others. It landed days before the August 6 inclusion deadline for Hegotá, Ethereum's next major network upgrade.
How the Tapered Burn Works
Under the current system, Ethereum creates new ETH to pay validators indefinitely. Even if every ETH were staked, yields would still sit near 1.5%, meaning there is always an incentive to add more.
The proposed change introduces a linear burn curve. Every 6.4 minutes — the duration of an Ethereum epoch — a fraction of each validator's newly issued reward would be permanently destroyed rather than paid out. That fraction rises linearly from zero to 100% as staked ETH approaches the 60.25 million threshold.
Validators would continue to earn transaction fees and tips (also known as MEV rewards). Only the newly created consensus-layer issuance would be subject to the burn.
The phase-in period would span roughly two years: approximately six months after the upgrade ships before the burn begins, followed by an 18-month ramp to the full rate.
Why the Authors Say It's Needed
De Tychey projects more than 70 million ETH staked by January 2028 if no action is taken. The proposal argues that beyond a certain threshold, additional staking makes Ethereum less secure rather than more, because ETH gets concentrated in large exchanges and staking providers, squeezing out solo stakers.
Approximately 41 million ETH is currently staked — close to 34% of supply — with another 2.5 million ETH waiting in the activation queue. No validators are queued to exit.
Pushback from DeFi and Staking Protocols
The proposal has divided the Ethereum community.
Stani Kulechov, CEO of Aave Labs, warned that driving staking rewards toward zero would make ETH borrowing strategies largely unviable. Much of the ETH borrowed on Aave is used to acquire more staked ETH — a trade that depends on staking yields exceeding borrowing costs.
Mike Silagadze, founder of liquid staking protocol ether.fi, criticized both the substance and the process. "EIP released with 48 hours notice for comments," he wrote on X, calling it "a major network economics change with far reaching implications for all of DeFi." He argued the change would push out solo stakers and leave staking to large centralized entities with zero cost of capital.
Silagadze also warned of price implications: "People who stake ETH don't sell it. This will halt any new ETH getting staked," potentially pushing tens of billions of dollars of ETH back into circulating supply.
Uncertain Path to Inclusion
The proposal arrives with roughly a 300-line draft implementation and no consensus among the validators and stakers whose yields it would affect. That combination makes it more likely to miss the Hegotá upgrade — planned for the second half of 2026 — and slip to a later fork.
The authors acknowledge the risk of delay, noting that every month the proposal sits unresolved, the staking ratio climbs by approximately 1.5 percentage points. At the current trajectory, staking could approach the proposed saturation ceiling within 18 months regardless.