Bankless · Friday, August 7, 2026
A group of Ethereum researchers has proposed a change to ETH's monetary policy, introducing a 'tapered issuance burn' that would burn a portion of staking rewards before distribution. The proposal aims to cap the incentive for staking ETH beyond 50% of the total supply, arguing that Ethereum is currently overpaying for security and that unbounded staking could dilute ETH's 'moneyness'. This has met opposition from DeFi builders who argue it would accelerate centralization and harm the DeFi ecosystem.
“On August 4th, six Ethereum researchers, Jerome Deschachet, Justin Drake, DAPLion, Pintail, and a few others, proposed a change to ETH's monetary policy, mainly how ETH's staking rewards work.”
“This is being called the tapered issuance burn. The idea is that Ethereum pays people, pays stakers for staking their ETH, but there's no cap on how much Ethereum pays for ETH stakers. No matter how much of the total ETH supply gets staked, even if all of the total ETH supply gets staked, stakers will still earn a positive yield, which means that there is always an incentive to stake more ETH forever.”
“The people who have proposed this are all EF researchers and like the researcher type. The people who are against this are, interestingly, all the DAP player people. So DeFi founders like Stani from Aave, Mike Silagazi from EtherFi, Lido is against this, DC Investor, as a community member, he is very anti this.”
“The pro case, the pro argument for tapering slash targeting is that Ethereum is overpaying for security. And as a broad strokes, Ethereum, it's been discussed that Ethereum is overpaying for security, so therefore we should reduce issuance.”
“The opposition argues that this actually just accelerates the centralization that it claims to fix. So compressing yield, reducing the amount of issuance for ETH stakers makes it more difficult for the marginal ETH stakers. So solo stakers and home stakers are going to have a harder time because they are less efficient than the industrial commercial stakers like Lido or Figments.”