Ethereum developer proposes that when staking ratio reaches 50%, validator net rewards drop to 0%, Aave founder warns institutional and DeFi demand may face pressure

Odaily News: Ethereum developers have proposed a "Tapered Issuance Burn" mechanism, which plans to gradually burn a portion of validators' ideal duty rewards as the ETH staking ratio rises; when staking volume approaches 50% of total supply, ETH net issuance will drop to 0%.

The proposal's author stated that the ETH staking ratio exceeded one-third of total supply in April; without adjustment, Jerome de Tychey said that by January 2028, staked volume could exceed 70 million ETH, accounting for more than 55% of supply.

Supporters argue that excessive staking could first render small independent validators uneconomical, leading to staking concentration among custodians and large service providers; the plan is proposed to be implemented over 18 months, with an additional preparation period of approximately 6 months before a potential network upgrade.

Aave founder Stani Kulechov stated that once the staking ratio exceeds 50%, rewards drop to 0%, and yield uncertainty could weaken institutional staking and DeFi demand. He pointed out that ETH lending strategies may be affected, and the proposal is still in its early stages. (Bitcoin.com News)