Ethereum developers submitted EIP-8361 on August 4, 2026, a proposal that would burn a rising share of validator rewards as more ETH is staked, cancelling issuance entirely when half the supply reaches stake. Co-author Jérôme de Tychey stated the validator entry queue is adding 1.75 million ETH monthly and that every month of delay costs approximately 1.5 percentage points of staking ratio. The proposal responds to Ethereum's staking ratio surpassing one-third of supply in April, with the current 33% staked ETH earning roughly 2.6% yield under existing issuance rules.
EIP-8361 Sets Burn Mechanism Tied to Staking Ratio
EIP-8361 establishes a fixed saturation balance of 60.25 million ETH, roughly half the supply at the time of the fork. The burn fraction scales with the staking ratio raised to the power of 1.5, reaching 100% at that balance. At that point a validator performing duties perfectly earns zero net consensus yield. The proposal touches only the consensus layer, and Prysm has a draft implementation running to approximately 300 lines of code.
Under the current curve, yield falls only with the square root of the staking ratio and maintains a floor near 1.5% regardless of how much ETH is staked. The authors argue that removing this floor allows the market to settle where yield meets the risk premium stakers demand, which they state is strictly below 50% of supply.
Imposed immediately, the burn would reduce current yield from 2.6% to 1.2%. The proposal phases in over an 18-month transition that temporarily doubles the base reward factor before decaying it back. With fork lead time, this provides approximately two years for adjustment. The taper's shape applies from the first epoch after activation. Issuance would peak near a 20% staking ratio at about 0.5% of supply annually, then fall to zero at 50%.
De Tychey Cites January 2028 Worst-Case Projection
De Tychey stated that a worst-case scenario built on conservative assumptions places more than 70 million ETH at stake by January 2028, exceeding 55% of supply. He wrote that every month of delay is worth around 1.5 points of staking ratio and that "the window is closing."
The draft argues that stake beyond a certain level reduces security by concentrating supply with custodians and staking providers, weakening the credibility of social slashing, and forcing out solo stakers who pay income tax on nominal yield. It also states that dilution taxes unstaked holders and allows liquid staking tokens to displace raw ETH as the ecosystem's working money.
Large operators face direct impact. Because issuance would fall past its peak, an operator that continues growing claims a larger share of a shrinking pool. An operator holding half the stake would find growth stops paying once approximately 31% of supply is staked.
Lido's Passadis Opposes Proposal Timing and Complexity
Isidoros Passadis, Chief of Staking at Lido, stated the proposal attempts too much at once and that its supporting research is "too theoretical." He wrote on August 4, 2026, that EIP-8361 "lays Ethereum's hard-fought uniqueness at the sacrificial altar of ETH as money." Passadis objected to the timing, stating issuance changes had been scheduled for a later fork.
Passadis warned the curve could produce a sustained equilibrium near 50% staked with zero nominal yield, which he called "a death-knell for the security of the network." He argued operators prioritizing expertise and decentralization would be priced out by large, minimal-cost parties able to run at break-even. Capping staking only displaces the too-big-to-fail problem, he stated, as yield-seeking ETH moves to riskier custodial venues.
De Tychey addressed that criticism pre-emptively, writing that "nobody needs to protect solo stakers from this EIP." He argued solo stakers need protection from a curve that raises dilution indefinitely with no mechanism to stop it.
Consensus issuance accounts for at least 93% of staking yield today, according to the proposal. EIP-8361 remains subject to the EIP inclusion process.
FAQ
What does EIP-8361 do to Ethereum staking rewards?
EIP-8361 deducts a rising share of validator rewards and burns the ETH, with the deduction scaling as more supply is staked. The burn fraction reaches 100% when 60.25 million ETH is staked, approximately half the supply, at which point validators performing duties perfectly earn zero net consensus yield.
Why did Ethereum developers submit EIP-8361 on August 4, 2026?
Co-author Jérôme de Tychey stated the validator entry queue is adding 1.75 million ETH monthly and that every month of delay costs around 1.5 percentage points of staking ratio. Ethereum's staking ratio passed one-third of supply in April, and the authors argue the window for action is closing.
What is Lido's position on EIP-8361?
Isidoros Passadis, Chief of Staking at Lido, stated on August 4, 2026, that the proposal attempts too much at once and that its supporting research is "too theoretical." He objected to the timing, saying issuance changes had been slated for a later fork, and warned the curve could price expert node operators out of the market.
