Ethereum and Solana are both pushing forward with plans to reduce the rewards stakers earn and shrink future token issuance. Solana's SIMD-0550 would accelerate the network's disinflation schedule, while Ethereum's EIP-8363 would burn an expanding share of validator rewards as more ETH gets staked. The proposals arrive as Grayscale's Ethereum and Solana ETFs prepare to convert staking rewards into cash payments for shareholders, a move filed with the SEC on July 17 and expected to take effect around Aug. 7.
Solana's faster disinflation
Solana developers want to double the network's annual disinflation rate from 15% to 30%. Under SIMD-0550, the terminal inflation rate of 1.5% would be reached in about 2.8 years, well inside the 5.7 years the current schedule would take. The model assumes 68% of SOL is staked. That would push the nominal staking yield from 5.84% today to 4.34% in year one, 3.00% in year two, and 2.25% in year three.
The tradeoff is fewer new SOL entering circulation: 18.9 million fewer over six years, worth roughly $1.47 billion at SOL's current price near $77.97. The proposal's authors put that figure at $1.51 billion.
Ethereum's burn mechanism
Ethereum researchers filed a draft proposal, EIP-8363, that would burn an expanding share of validator rewards as the staking ratio climbs. The burn reaches 100% once roughly half of ETH's supply is staked. One author warned that without reform, continued validator entry could push more than 70 million ETH — over 55% of supply — into staking by January 2028. The idea is to stop paying ever more issuance to attract stake once enough ETH already secures the chain.
The cost to validators
Solana's modeling shows the accelerated schedule pushing 2 additional validators into unprofitable territory in year one, 13 in year two, and 30 in year three, out of 738 modeled. Ethereum's debate raises sharper concerns about smaller solo validators, since large custodians and staking companies can spread fixed costs across more staked ETH. Staking still carries slashing and validator risk, a point participants in Ethereum's debate raise to qualify how closely staking resembles a risk-free rate.
Who gains from lower yields
Investors who hold Ethereum or Solana without staking benefit most directly, since reduced issuance means less dilution reaching their share of the network. Both proposals make the networks easier to market around scarcity, pulling their investment pitch a step closer to Bitcoin's supply story. For Solana, lowering the native staking yield could redirect capital toward other DeFi uses, since the proposal frames staking yield as something close to a risk-free rate inside its economy.
Grayscale's ETFs will now distribute staking rewards as cash at least quarterly, aligning with the broader trend of turning staked assets into income streams rather than compounding holdings.
