Six Ethereum researchers, including Justin Drake of the Ethereum Foundation, have proposed a new standard called EIP-8361. The draft calls for gradually burning validator rewards as the share of staked ETH grows, reaching a full burn once 60.25 million coins are staked. That is roughly $112 billion at current prices and exactly half of the total Ethereum supply.
About 41 million ETH is staked today, or 34% of the coin's supply, and the entry queue keeps growing rather than shrinking. The authors warn that without any changes, more than 70 million coins could be staked by January 2028, well past the safety line they themselves drew.
How the burn mechanism works
Ethereum pays validators for every block they confirm by minting new coins. EIP-8361 would burn a rising share of that new issuance at the close of each epoch, and an epoch on the network lasts 6.4 minutes. The closer the staked share gets to the 50% mark, the larger the portion of the new reward that gets destroyed for good.
Transaction fees and tips to validators stay untouched, only freshly minted coins get burned. The rollout is spread out over time: about 18 months to gradually raise the burn rate, plus roughly six more months of technical prep, for a total of around two years. Validators keep getting paid in full for their work, only the source of that payment changes.
This is not Ethereum's first attempt at burning coins. The EIP-1559 upgrade back in 2021 already trained the network to destroy part of the base fee on every transaction, and during periods of heavy load it even pushed ETH supply into deflation. The new proposal works differently: it burns the block reward itself rather than transaction fees, reaching directly into the network's monetary policy instead of just how users pay for block space.
Why 34% staked ETH already worries developers
The problem, as the authors frame it, is that staking never stops paying. Even if every last ETH were staked, yield would still sit near 1.5% a year, so there's always a reason to add more to the pile.
One of the proposal's authors, Jerome de Tychey, projects that without changes, staked ETH could top 70 million coins by January 2028. Under current rules, entry and exit are both capped. Roughly 57,600 ETH can activate per day, and the entry queue already holds 2.5 million coins with a wait of six weeks or more. Leaving any faster isn't an option either.
The risk, in the authors' view, isn't the staking volume itself but who ends up holding those coins. The higher the yield, the harder large exchanges and delegated staking services pull small holders in, leaving fewer independent validators and a network more dependent on a handful of big players.
When Ethereum switched to Proof-of-Stake in the fall of 2022, only a small slice of the supply was staked. The ratio has climbed almost without interruption since then and now tops a third of all ETH in circulation. It's that steady climb, not a one-off spike, that pushed six researchers to sit down and write EIP-8361.
Aave warns of a hit to DeFi strategies
Part of the borrowing on Aave exists specifically to buy more staked ETH, and that trade only works while staking yield beats the cost of the loan. Aave Labs CEO Stani Kulechov wrote on his blog that cutting staking rewards would make most of those ETH lending strategies unworkable.
This isn't a niche corner of the market. ether.fi founder Mike Silagadze went further, writing that the change would hit seven of the top ten DeFi protocols, since loans backed by staked ETH make up a meaningful share of their capital turnover. If staking yield drops faster than borrowing costs, some borrowers would be forced to unwind positions early, adding extra pressure on liquidity across lending protocols.
ether.fi accuses the authors of rushing it
Silagadze criticized not just the substance of the proposal but how it was pushed through. According to him, the draft got only 48 hours of public comment before the deadline for inclusion in the network upgrade, far too little for a change of this scale.
"This is a major network economics change with far reaching implications for all of DeFi. People who stake ETH don't sell it, and this proposal will halt any new ETH getting staked while potentially pushing tens of billions of dollars of ETH back into circulation."
- Mike Silagadze, founder of ether.fi, from a post on X dated August 5, 2026
Silagadze argues the change would push out solo stakers who aren't subsidized by the Ethereum Foundation and leave staking to large centralized entities with zero cost of capital. Supporters of the draft counter that this exact kind of centralization is the real threat they're trying to stop before it becomes irreversible.
Will it make it into Hegotá
The deadline for smaller changes to be included in Ethereum's next Hegotá upgrade passed on August 6, just a day after EIP-8361 was published. Developers have only about 300 lines of draft implementation and no consensus among the validators and stakers whose yield it would cut first.
The authors themselves admit that every month of delay adds roughly 1.5 percentage points to the staking ratio. That means the longer the debate drags on, the closer the network gets to the very level the proposal was meant to prevent. The most likely path now is that the draft misses this upgrade and slides into a later development cycle with a more refined version of the math.
Hegotá itself, planned for the second half of 2026, is mostly focused on structural cleanup, censorship resistance, and shrinking the size of Ethereum's state. A monetary policy change of this magnitude technically falls outside that original scope, which is why some developers argue EIP-8361 deserves its own, more carefully prepared fork.
- Borrowed ETH on Aave and similar platforms stops making sense once staking yield drops below the cost of the loan
- Solo validators without backing from large funds risk getting squeezed out first
- Weaker staking incentives could push some large holders toward selling
- A 300-line draft implementation leaves plenty of room for bugs to slip in
What it means for ETH holders
EIP-8361 is still a draft, not an adopted standard, and its fate will be decided over the coming weeks in discussions among Ethereum's core developers. If it gets rejected or delayed, the staked share of ETH will keep climbing at recent months' pace, and the argument over staking limits will simply carry over to the next upgrade cycle.
Anyone tracking the market and planning to sell Ethereum for hryvnia is unlikely to feel any direct effect soon, since changes to staking yield would play out over years even if the draft eventually passes. Participants in DeFi protocols like Aave, though, may want to stress-test their long-term strategies now in case staked ETH yield starts dropping sooner than expected.
The thing worth watching over the next few weeks isn't the developer vote itself, but how fast the staked share of ETH keeps closing in on half the supply. Every extra percentage point makes the staking-limits debate more urgent, regardless of what happens to this particular draft.
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