Ethereum, Solana Proposals Could Shrink ETF Staking Payouts

Grayscale disclosed in July filings that its Ethereum and Solana staking products will convert on-chain staking rewards into cash and distribute proceeds to shareholders at least quarterly, with the framework expected to take effect around Aug. 7. The change links ETF payouts directly to the size of each protocol’s reward pool.

Solana developers propose SIMD-0550, which would double the network’s annual disinflation rate from 15% to 30%. That schedule reaches a 1.5% terminal inflation rate in about 2.8 years instead of 5.7 years under the current plan. Using a 68% staking assumption, modeled nominal staking yield falls from about 5.84% today to roughly 4.34% in year one, 3.00% in year two and 2.25% in year three. The proposal would cut new SOL issuance by about 18.9 million tokens over six years, valued at roughly $1.47 billion using a SOL price near $77.97. Modeling for a typical staker shows simple compounded yield over three years declining from about 13.15% under the current schedule to about 9.89% under the proposed schedule, a gap that would require roughly 3% more cumulative price appreciation over three years to match total return.

Ethereum researchers filed draft EIP-8363 in early August. The proposal would burn an increasing share of validator issuance as the staking rate rises, with the burn rate reaching 100% of consensus rewards once about half of ETH is staked. One author projecting current trends warned that continuing validator entry without change could put more than 70 million ETH-over 55% of supply-into staking by January 2028. The draft aims to remove the protocol-level reward incentive for additional validators as staking approaches that threshold.

The two proposals affect different groups in predictable ways. Holders who do not stake would face less dilution as new issuance slows. Passive stakers would receive lower protocol-level income. ETF shareholders will receive cash distributions that reflect whatever rewards the protocols generate and Grayscale collects. Validators, especially smaller operators with higher fixed costs, would see tighter margins; Solana’s modeling predicts two additional validators becoming unprofitable in year one, 13 in year two and 30 in year three out of 738 modeled validators. Ethereum discussions identify similar risks for solo and small validators, while large custodians can spread costs across far more ETH.

Commercial stakeholders that earn fees on staking-staking services, DeFi platforms and asset managers-have financial reasons to resist lower issuance. Proponents of the changes argue that reduced issuance can tighten supply and shift capital toward other on-chain uses, while critics contend lower rewards will reduce staking income and could weaken the case for passive staking.

Grayscale’s distribution framework means shareholder payouts will change as networks change protocol rewards. Any final decisions by Solana and Ethereum governance processes will determine the size of future cash distributions to ETF holders.