New Ethereum proposal would cut issuance to zero if staked ETH reaches $112 billion
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Summary
Six prominent Ethereum researchers have proposed a new plan to gradually burn an increasing share of validator rewards as more ETH is staked. The burn would reach 100% at about 60.25 million staked ETH, roughly half the total supply, effectively cutting Ethereum’s net issuance to zero. This proposal aims to cap staking and reduce dilution by limiting new ETH issuance while validators retain transaction fees and tips. The phase-in would take around two years, but the proposal faces division among developers and DeFi participants and may not be included in the upcoming Hegotá upgrade.
Why it matters
The proposal is intended to prevent staking yields from rising indefinitely, which could push more ETH into exchanges and large staking providers instead of individual holders, potentially undermining Ethereum’s decentralization and security. By capping staking rewards at zero issuance, it aims to strengthen ETH’s long-term scarcity and valuation. However, some DeFi actors warn it could disrupt borrowing strategies and push solo stakers out, impacting market dynamics. The decision also influences the future structure of Ethereum’s monetary policy.
Key context
Ethereum uses staking to secure its network, rewarding validators with newly issued ETH. Currently, about 41 million ETH (34% of supply) is staked, with another 2.5 million waiting for activation. The network limits validator entry and exit rates to maintain stability. Critics of the current system argue that unlimited staking rewards incentivize concentration of ETH with exchanges and providers rather than individual holders, increasing centralization risks. The proposed burn schedule would phase in over approximately 18 months after upgrade deployment, reducing new ETH issuance as staking grows until it reaches zero at roughly half the total ETH supply.
Key numbers and entities
The proposal is signed by six Ethereum researchers including Justin Drake of the Ethereum Foundation and Jérôme de Tychey. The burn would reach 100% at approximately 60.25 million staked ETH. Currently, about 41 million ETH is staked and 2.5 million ETH is in the activation queue. Activation is limited to roughly 57,600 ETH per day. The Hegotá upgrade deadline for inclusion is August 6, 2026.
What remains unclear
The proposal does not have consensus among Ethereum validators, stakers, or DeFi participants and faces uncertain inclusion in the Hegotá upgrade. The source notes a short public comment period of 48 hours and limited draft implementation of about 300 lines, suggesting limited community readiness. It is unclear how market participants will respond if the proposal delays or if staking rates rise during any delay. The potential longer-term economic and network impacts, especially on smaller and solo stakers, remain open questions.