A New Ethereum Proposal Could Halve Staking Rewards: Who Feels It First?

Ethereum Foundation researcher Justin Drake and five co-authors want to shrink the reward for staking ETH. Their draft plan would switch that reward off once half of all ETH is locked up.

Stakers would earn less. Everyone else would hold a slightly bigger slice of ETH. BeInCrypto maths puts the new reward near 1.1% a year, down from 2.6% now.

Why the Justin Drake Ethereum Proposal Targets Issuance

Ethereum pays people to help run it. Lock up ETH, help check transactions, earn new ETH.

The catch is that the payment never really stops. Even if every ETH were staked, it would still pay roughly 1.51% a year. BeInCrypto checked that against the code.

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So the staked pile keeps growing. It now sits at 41.1 million ETH, or 33.7% of all ETH in existence.

It is also bunching up. Lido alone holds 9.41 million ETH, by its own count, and Ethereum staking remains concentrated in a few hands.

The fix is simple, that every few minutes, the network would take a slice of each reward and destroy it.

That slice grows as more ETH gets staked. Today it would swallow 56%. At 60.25 million ETH, it would take the lot.

Burning is not new here. EIP-1559 already destroys part of every transaction fee.

Drake is the famous name, but not the author. A researcher known only as pintail wrote it. The argument itself has run since January 2023.

The Case Against Cutting ETH Staking Rewards

The plan says the biggest operators feel the squeeze first. The maths says not for a while.

BeInCrypto applied the plan’s own formula to Lido. Growth keeps paying Lido until about 49 million ETH is staked. That is nearly 8 million more than today.

The authors admit one reason. Validators also earn by ordering transactions, called Maximal Extractable Value (MEV). The burn never touches that money, and it always rewards getting bigger.

They put that side income below 78,300 ETH last year, worth 0.20% at most. That figure is theirs. BeInCrypto could not confirm it.

Home stakers face a second squeeze. Fines stay the same size while earnings shrink. Recovering from a few hours offline would take about four times longer.

So why half? The authors chose it on judgement, not on data.

“Half the supply is the last figure that refers to anything beyond preference: it is the majority threshold the risks above turn on,” they wrote.

That reasoning matters for ETH price levels, with ether near $1,866 on Tuesday. Reward changes move money fast, as the record ETH validator exit queue showed in 2025.

Nothing is settled yet. The plan is only a draft. It still needs editors, client teams, and a network upgrade.

Even day one stings. Rewards would drop 13% straight away. The question is whether big stakers accept a rule that stops paying them to grow.

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