Ethereum Proposal Limits Staking Rate Risk Above 50%

The Ethereum community has submitted an improvement proposal EIP 'Tapered Issuance Burn' aimed at adjusting the ETH issuance mechanism to reduce the risks of centralization and dilution caused by excessively high staking ratios. The proposal suggests burning a portion of the theoretical rewards for validators in each epoch, with the burn rate increasing as the staking scale grows: when the staking rate reaches approximately 50%, the net staking yield will gradually decrease to zero. This mechanism can limit the inflation of ETH supply, reduce the dilution pressure on holders, and prevent staking from becoming overly concentrated among custodial institutions and staking service providers, thereby maintaining ETH's attributes as a neutral asset and a store of value. Under the design, the issuance of ETH will peak at a staking rate of about 20%, with an annual issuance rate of approximately 0.5%, and will drop to zero when the staking rate reaches 50%. Combined with the EIP-1559 and Blob fee burn mechanisms, ETH supply may more frequently enter a deflationary state in the future. The proposal notes that the ETH staking ratio exceeded one-third of the total supply in April 2026 and continues to grow. Under the current issuance curve, even if all ETH participates in staking, the staking yield will not fall below approximately 1.5%, leading to a lack of a 'closure mechanism' for staking incentives. This plan aims to correct the long-term dilution issues caused by the current issuance curve, allowing staking yields to ultimately be determined by market risk premiums rather than fixed algorithmic incentives.