Ethereum proposal would burn validator rewards, cut issuance to zero
In brief
- Ethereum researchers proposed burning validator rewards as staking climbs, reaching 100% burn at ~60.25M ETH staked.
- About 41M ETH is staked today (34% of supply); 2.5M more waits in queue with 6+ week activation delays.
- Stani Kulechov (Aave Labs) warned zeroing rewards would make ETH borrowing strategies unviable; Mike Silagadze (ether.fi) flagged staking centralization risk.
- Proposal phases in over 18 months, with upgrade shipping roughly 6 months prior—totaling ~2 years to adjust.
- Proposal under consideration for Hegotá, Ethereum's next upgrade planned for H2 2026.
The Proposal
Six researchers signed the proposal, including Justin Drake of the Ethereum Foundation. The burn would phase in over 18 months, with the upgrade shipping roughly six months before that—totaling about two years for the network to adjust. About 41 million ETH is staked today, representing close to 34% of the total supply. Another 2.5 million ETH sits in the queue waiting to be activated, with a wait of six weeks or more.
Validators would keep all transaction fees and tips they earn from building blocks. Only newly created ETH gets burned. This distinction matters: even as issuance shrinks, validators don't lose fee income—they lose only the freshly minted token reward component.
One of the proposal's authors, Jérôme de Tychey, projects more than 70 million ETH staked by January 2028 if nothing changes. That would surpass the burn threshold and trigger the zero-issuance regime.
Community Backlash
The proposal has divided Ethereum market developers and participants. Aave Labs chief executive Stani Kulechov said in a blog post that moving staking rewards toward zero would make ETH borrowing strategies mostly unviable. Borrowing ETH to stake and earn yield—a common DeFi play—collapses if rewards approach zero.
Mike Silagadze, founder of liquid staking protocol ether.fi, objected to the process as much as the substance. He argued the change would push out solo stakers who aren't subsidized by the Ethereum Foundation or other entities, leaving staking to large centralized operations. The proposal was released with 48 hours notice for comments—a timeline some viewed as rushed.
What's Next
The bigger question is whether this proposal makes it into Hegotá, Ethereum's next network upgrade planned for the second half of 2026. Currently about 57,600 ETH per day can activate as validators, so the queue will take months to clear. The timeline gives the community room to debate, but it also means staking growth continues unabated while the proposal sits in limbo.
