Approximately 33% of ETH is currently staked, generating roughly 2.6% yield. EIP-8361 proposes a burn mechanism on validator rewards that scales with the staking ratio raised to the power of 1.5, canceling rewards entirely when 50% of the supply is staked. The implementation would include an 18-month gradual transition, initially reducing yield to 1.2%. Isidoros Passadis, Chief of Staking at Lido, criticized the proposal as too complicated and theoretical, warning that a sustained equilibrium near 50% staked with zero nominal yield could price out decentralized operators in favor of large, minimal-cost parties. The proposal’s authors estimate the staking ratio will exceed 55% by January 2028 without intervention.
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