Six Ethereum researchers submitted a draft proposal that would gradually burn validator rewards as more ETH gets staked, eventually cutting issuance to zero. The burn reaches 100% when staking hits roughly 60.25 million ETH, about half the total supply.
The mechanism works like this. Every 6.4 minutes, a fraction of validator rewards gets destroyed instead of paid out. That fraction grows linearly as staking climbs toward saturation. Validators keep earning the same way for the same work, and they still pocket all transaction fees and tips from building blocks. Only the newly created ETH gets burned.
Why cap staking at all
The proposal aims to limit staking by making additional stake less profitable. The concern is real: ever-rising yields push ETH into large exchanges and staking providers, which concentrates validation power and weakens the network's decentralization. Burning newly issued rewards without touching fees keeps the incentive structure intact while slowing concentration.
The rollout would take about two years total. Eighteen months of gradual phase-in, plus six months before the upgrade ships. That gives validators time to adjust their economics. The current staking curve never switches off, but this one hits zero at the 50% mark and stays there.
The proposal has split developers and DeFi participants on whether this is the right lever. It may not make it into the upcoming Hegotá upgrade, leaving its future uncertain.
This article is informational only and does not constitute financial or investment advice.
