Ethereum Proposal: Pledge rewards or terminate at 50%.

Ethereum researchers propose a new distribution model that will gradually reduce verifier rewards and eventually zero them.

Ethereum researchers have proposed a new distribution model that will gradually destroy verifier rewards until they drop to zero when about half of the total supply of Ethereum is pledged.

Summary

According to the EIP-8361 proposal, as the proportion of Ethereum pledges increases, the part of verifier rewards that is destroyed will continue to increase. When the pledged amount approaches 60.25 million ETH (approximately half of the total supply), the reward will drop to zero. The draft establishes an 18-month transition period to smooth out changes in verifier earnings. Currently, EIP-8361 is still in the community review stage and has not yet been approved for inclusion in the Ethereum upgrade.

EIP-8361 will gradually reduce Ethereum pledge rewards

Ethereum researchers Jérôme de Tychey, Justin Drake, dapplion, pintail, pa7x1 and Ladislaus von Daniels jointly submitted EIP-8361 as a draft of Ethereum's core improvement proposal.

This mechanism, called "Decreasing Release Destruction", will destroy some of the rewards verifiers receive for execution certificates, proposed blocks, and participation in synchronization committees. The destruction proportion will increase as the proportion of pledged ETH increases.

When the pledged amount reaches approximately 60.25 million ETH, the destruction rate will eventually reach 100%. Based on Ethereum's current circulating supply of approximately 120.7 million pieces, this level is close to 50% of all ETH. According to relevant data, as of the time of writing this article, the circulation supply is approximately 120.68 million ETH.

Therefore, after the pledge amount reaches the proposed threshold, the verifier will no longer receive issuance rewards from the consensus layer. But they can still earn income through other methods, including transaction preference fees and maximum extractable value.

Why Ethereum researchers want to change the issuance mechanism

EIP-8361 aims to eliminate what its author describes as a "permanent incentive" that encourages more ETH to enter the pledge even when additional pledges provide only limited security benefits.

The authors write: "The current issuance curve will still provide a yield of approximately 1.5% when almost all ETH is pledged. The existence of this yield floor means that the issuance mechanism does not set a stopping point to prevent further pledge behavior."

According to the draft model, annual ETH issuance will peak at approximately 0.5% of supply when the pledge ratio reaches approximately 20%. Subsequently, as more ETH enters the pledge, the circulation will gradually decline and drop to zero as it approaches the threshold of 50%.

Currently, Ethereum's pledge ratio has exceeded one-third of its supply. The proposal estimates that under the existing reward structure, if demand continues, the number of ETH pledged may exceed 70 million by January 2028.

Transition period will initially protect verifier income

Instead of immediately applying the final reward curve, the researchers propose setting up an 18-month transition period. During this period, Ethereum's basic reward factor will first rise from 64 to 128, and then gradually fall back to the current level. This temporary adjustment is intended to keep verifier benefits close to current levels in the initial stage, before the gradual reduction of destruction mechanism will then exert a more restrictive effect.

For verifiers and pledge service providers in the United States, the economics of operating Ethereum infrastructure may change if developers ultimately incorporate the proposal into network upgrades. Lower issuance rewards may affect expected returns, but the draft will not change U.S. tax or securities regulations on pledge activities.

This plan also follows the thinking of another previous Ethereum research proposal. The mechanism, called "Verifier Income Redirection," allows verifiers to use 0% to 10% of their pledge income to fund the ecosystem. Under the proposal, if 51% of validators support a non-zero redirection rate, the contribution will become mandatory. The authors believe that sharing funds can help fund research, security and public tools within Ethereum.

EIP-8361 still faces community review

EIP-8361 is currently only a draft and will not automatically change Ethereum's monetary policy. It must undergo technical review, community discussions, and developer coordination before it can be considered for future network upgrades.

The proposal has raised concerns that the unpredictability of earnings could affect independent verifiers, institutional pledge businesses, and the decentralized financial strategies built around pledging ETH.

ETH prices did not show a significant reaction to the draft. According to market data, as of writing, ETH was trading at approximately US$1878, up approximately 0.5% in 24 hours, and trading volume was approximately US$7.86 billion.