Ethereum Researchers Take Action: A Radical Plan to Eliminate Staking Rewards
Ethereum researchers have submitted a radical proposal that suggests resetting the network’s inflation to zero and capping the amount of staking at 50% of the total supply by burning validator rewards as the staking rate increases.
Leading figures in the Ethereum ecosystem have published a draft for a new Ethereum Improvement Proposal (EIP) titled “Tapered Issuance Burn,” which could fundamentally change the network’s economic structure. Signed by researchers such as Justin Drake, Jérôme de Tychey, and pintail, this proposal envisions permanently destroying a portion of validator rewards as the staking rate on the network rises.
Under this mechanism, when the amount of staking reaches approximately half of the total supply—specifically 60.25 million ETH—the burn rate will hit 100%, and the issuance of new Ethereum (ETH) will stop entirely. Researchers argue that the current system encourages unlimited staking, leading to excessive concentration in large providers like centralized exchanges. It is stated that this situation increases the risk of centralization rather than contributing to network security and pushes individual validators out of the system. To prevent potential shocks, the reduction in rewards is planned to be spread over an 18-month period.
Deflation and DeFi Balance in the Ethereum Economy
The proposal has sparked mixed reactions in the crypto world. Grayscale Research Head Zach Pandl highlighted the deflationary structure, arguing that a reduction in supply would have a direct positive impact on the ETH price. According to Pandl, lowering inflation is a critical step in preserving the asset’s value.
However, criticism was not far behind. Aave Labs CEO Stani Kulechov stated that resetting rewards could undermine borrowing strategies and yield models in the DeFi ecosystem. Kulechov warned that this could stifle financial use cases on Ethereum. The proposal, shared on GitHub in mid-July, has now officially begun to be discussed in community forums.