Ethereum pledge rate is approaching 35%, and a proposal is to reduce circulation...

The cost of Ethereum pledge: How EIP-8363 reshapes the verifier reward landscape

The debate surrounding Ethereum pledge has shifted from how many verifiers the network can attract to whether to pay verifiers too much. Currently, approximately 41.9 million ETH are in pledge status, which accounts for 34% to 35% of the total network supply, depending on the data provider and supply denominator. Data from the StakingRewards website on August 14 showed that the proportion was 34.76%, while validator queue data showed that approximately 41.9 million ETH have been pledged to pledge, and there are still a large number of new entrants waiting in line for activation. In this context, Ethereum researchers proposed EIP-8363, the "conical release burning" proposal. The proposal does not change the way verifiers initially receive rewards, but rather gradually burn out an increasing proportion of rewards as more ETH is pledged. Its monetary policy logic is straightforward: Ethereum should not continue to dilute the interests of non-pledged holders in order to attract validators that the network may no longer need. The economic consequences are equally clear: listed companies that hold ETH specifically to obtain pledge income will face a squeeze in yields. This is essentially a "who should get paid" battle dressed in the guise of monetary policy.

Current status of Ethereum pledge and reasons for its continued rise

As the actual threshold for pledge lowers, the pledge proportion of Ethereum shows an upward trend. Institutional custodians, liquidity pledge agreements, professional validator operators and increasingly regulated investment products make it easier for holders to reap validator benefits without having to operate their own infrastructure. The authors of EIP-8363 believe that Ethereum's existing release curve exacerbates this trend. As more ETH enters the pledge, the verifier's income will decline, but the rate of decline is not enough to form a strong equilibrium state. Under the existing mechanism, issuance will increase as the total amount pledged increases, while non-pledged ETH holders suffer dilution, which in turn provides them with another financial incentive to pledge. Queue data suggests that the mechanism is still attracting funds. In mid-August, approximately 2.3 million ETH were waiting to enter the validator set, while the exit queue was relatively small. Fidelity Investments could become another institutional channel. Fidelity Ethereum Fund revised its arrangements on August 7 to prepare for collateral through Anchorage Digital and BitGo. Once the necessary registrations take effect and pledges begin, the fund is expected to retain 85% of the pledge rewards after paying fees to sponsors, custodians and node operators, and the net pledge proceeds will be used for quarterly distribution. This is the kind of low-threshold pledge channel that makes the issue of issuance more urgent.

Impact of EIP-8363 on verifier rewards

EIP-8363 does not simply reduce pledge yields on a fixed basis. Verifiers will first earn rewards according to Ethereum's existing distribution mechanism. Then, the agreement will burn some of the rewards based on the active ETH pledge amount. The combustion ratio is calculated based on the ratio of active pledge amount to fixed saturation amount (60.25 million ETH), and takes it to the power of 3/2. At the saturation point, 100% of the target consensus layer circulation will be burned. The proposal includes an 18-month transition period rather than immediate across-the-board cuts. With about one-third of ETH pledged, modeling surrounding the proposal shows that after full implementation, consensus level verifiers 'yields will drop from about 2.6% to about 1.2%. Executive income, such as priority fees and tips, is not affected by the burn of this issue. The previously widely reported statement that "another proposal would eliminate issuance when the pledge of ETH reaches US$112 billion" actually originated from the same proposal, but was mistakenly marked with another EIP number at the time. The agreement does not include a dollar threshold, but it specifies 60.25 million ETH, which is approximately half of Ethereum's total supply when the parameter was designed.

Listed companies holding ETH libraries face the most direct impact

For companies that include ETH on their balance sheets, pledging proceeds is one of the clearest reasons to hold Ethereum over other non-yielding digital assets. SharpLink Company illustrates this well. Its filings with the U.S. Securities and Exchange Commission show that in the first half of 2026, the company's revenue from native pledge awards was $18.7 million. Its Ethereum treasury management segment generated $22.7 million in revenue during this period, accounting for approximately 96% of the company's total revenue. BitMine is even larger. As of August 9, it has pledged more than 5.06 million ETH units. The company used a pledge yield of 2.63% to estimate that the annualized pledge reward was approximately US$294 million. EIP-8363 will not mechanically reduce the value of these ETH positions, nor will it completely eliminate all verifier income at current pledge levels. However, it does reduce the recurring benefits available from the same balance sheet. This is important because these treasury companies can now describe ETH as both a value-added reserve asset and a source of recurring cash flow. Lower agreement yields weaken the second part of this description.

Supply discipline and the trade-off of verifier economics

Proponents have different views on this loss of gains. They believe that pledge rewards are not free income. The newly issued ETH will dilute all unpledged people. As institutional pledges become easier, this dilution may encourage more holders to join pledges simply to avoid loss of relative network ownership. EIP-8363 attempts to break this feedback loop. The price is a change in the composition of validators. Lower rewards do not have the same impact on all verifiers. Large treasury companies, exchanges and professional pledge service providers can spread infrastructure costs across huge ETH pools and supplement consensus rewards with tip income. Smaller validators and independent validators lack economies of scale. Research on the Ethereum pledge market found that independent operators are more sensitive to changes in pledge rewards than centralized exchanges and liquidity pledge providers. Therefore, too aggressive reduction in issuance may reduce pledge ratios while concentrating more of the remaining pledge shares in the hands of large operators. Monetary policy goals and decentralization goals are not always consistent.

Who will decide the final fate of EIP-8363?

Currently, nothing in EIP-8363 is planned to change Ethereum immediately. The proposal is still in the draft stage. It was presented as a proposal during an August 6 consensus conference call for all core developers to be included in the Hegotá development process, but is not currently listed as a candidate proposal for Hegotá. The decision was not made through a referendum by token holders. Core changes to Ethereum need to go through the EIP process, technical review, implementation work, and gain rough consensus from the client team and core developers before being included in network upgrades. This makes EIP-8363 still far from being activated, but the arguments behind it have practical significance. As we previously explained in our explanation of Ethereum Pledge and Monetary Policy, pledge yields not only determine the profitability of the verifier, it also affects the dilution rate of ETH, the attractiveness of pledged products, and increasingly affects the economic situation of listed companies holding billions of dollars in ETH. With nearly 42 million ETH pledged, the question is no longer whether Ethereum can persuade holders to lock in capital, but whether the network still needs to pay such high rewards to allow them to do so.