Ethereum researchers have introduced EIP-8363, known as "Tapered Issuance Burn," which proposes to gradually reduce staking incentives as more Ether is locked to secure the network. The core mechanism would eventually halt protocol issuance entirely once 50 percent of ETH's total supply is staked.
Justin Drake of the Ethereum Foundation and Jerome de Tychey, co-founder of the Ethereum Community Conference and an EIP-8363 author, argue that Ethereum has reached a point where additional staking provides diminishing security returns. They contend that continuing to issue rewards dilutes holders who do not stake their ETH.
The proposal faces strong opposition from DeFi builders, staking providers and institutional investors. Critics argue EIP-8363 could weaken network decentralization, disrupt existing lending markets and erode confidence in Ethereum's monetary policy. Mike Silagadze, founder of Ether.fi, expressed concerns about the proposal's impact on DeFi, decentralization and institutional adoption.
Dr. Steve Berryman, Bitwise's head of client partnerships for Ethereum, questioned whether Ethereum is genuinely overpaying for security or if EIP-8363 addresses a non-existent problem. He argues that market forces are already slowing staking participation without changes to Ethereum's issuance policy.
Currently, approximately 41.5 million ETH is staked on the network, earning a yield of 2.67 percent and representing 34.07 percent of Ethereum's entire supply, according to the Ethereum Validator Queue. Staked ETH has risen 15 percent since the beginning of 2026.
Berryman anticipates a natural ceiling for staked ETH by year-end 2026, suggesting that yields falling to around 2 percent are unlikely to attract significantly more participation due to liquidity requirements. Recent staking growth has been largely driven by institutional entrants such as Bitmine and BlackRock. Once these players complete their allocations, participation growth will naturally decelerate, he said.
