Issuance curve burn, keeping staking below half

Strawmap I* (2028) · tapered issuance burn

As more ETH is staked, a rising share of validator rewards is burned to reduce new ETH issuance. At the point where half of all ETH is staked, the burn ratio reaches 100%, so there is no longer any issuance incentive to increase staking beyond that.

Why it is needed

Today, as staked ETH grows, the new ETH minted for validators, that is issuance, keeps growing. Validator yield falls gradually but does not drop below about 1.5%, so there is no point at which the incentive to stake switches off. The proposal points to two problems. First, if ETH concentrates in a few operators such as exchanges, ETFs and staking services, the community has a harder time correcting problems with a fork, and solo stakers, who pay tax on nominal income, are pushed out first. Second, holders who do not stake see their share shrink as new ETH is minted, so interest-bearing liquid staking tokens take the place of ETH as collateral and a means of payment. The base asset then takes on the contract and governance risk of particular issuers. The proposal tries to stop this trend by removing the issuance incentive at the point where half of all ETH is staked. However, at the October 2026 core developers call (ACDC), the champions withdrew the proposal in order to follow a broader community-led process. The placement of the I* fork (2028) on the Strawmap is only an estimate, and the work is still at the research stage, so its content may change or be dropped.

How it works

  1. Measure the staking size The protocol does not know the total ETH supply, so it counts by balance instead of ratio. It compares the sum of active validator balances with the saturation balance (SATURATION_BALANCE, about 60.25 million ETH, half of the supply at the fork).
  2. Calculate the burn ratio The active balance divided by the saturation balance, raised to the power of 3/2, is the burn ratio, and it does not exceed 1. This makes total issuance peak at a staking ratio of about 19.8% and fall to 0 at 50%.
  3. Burn that share of rewards Each epoch, the burn ratio is deducted from attestation rewards and block proposer rewards. The sync committee is charged on all 512 members regardless of participation, which closes the route of avoiding the burn by abstaining.

Related EIPs

← Roadmap