Ethereum Improvement Proposal EIP-8363, dubbed "Tapered Issuance Burn," seeks to gradually decrease staking rewards as more Ether is locked to secure the network. The proposal would cut new protocol issuance to zero once 50 percent of ETH's total supply is staked.
Authors Justin Drake of the Ethereum Foundation and Jerome de Tychey, co-founder of the Ethereum Community Conference, argue that Ethereum has reached a point where additional staking offers diminishing security returns. They contend that continued issuance dilutes non-staking holders and that the network no longer needs to pay for additional security.
Currently, about 41.5 million ETH is staked, representing 34.07 percent of the entire supply, according to the Ethereum Validator Queue. Staked Ether earns an annual yield of 2.67 percent.
The proposal has generated significant opposition from DeFi builders, staking providers and institutional investors. Critics warn that EIP-8363 could weaken network decentralization, disrupt Ethereum lending markets and erode confidence in the network's monetary policy.
Mike Silagadze, founder of Ether.fi, said, "This will probably be the single most damaging thing to Ethereum's decentralization and ultimately its value." Dr. Steve Berryman, Bitwise's head of client partnerships for Ethereum, said the proposal is "a solution in search of a problem."
Berryman argues that market dynamics are already slowing staking participation without requiring a change to Ethereum's issuance policy. He anticipates a "natural ceiling" for staking participation by the end of 2026, with yields near 2 percent unlikely to attract substantial new ETH given liquidity demands.
The amount of staked ETH has grown 15 percent since the start of 2026, primarily attributed to institutional entrants such as Bitmine and BlackRock. Berryman projects that once these institutional players complete their staking allocations, the rate of new participation will likely slow, suggesting that market forces may achieve similar effects to EIP-8363 without protocol-level changes.
