Vitalik Buterin Proposes Higher Staking Rewards for Upcoming ETH PoS Algorithm

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Ethereum co-founder Vitalik Buterin proposed a higher staking reward for the upcoming proof-of-stake (PoS) algorithm implementation on the Ethereum blockchain on GitHub on April 20.

Per the proposal, 2,097,152 ether per year would be issued when 134,217,728 ether is staked and validating transactions, resulting in an annual return for stakers of 1.56%. The current circulating supply of the coin is 105,764,762 ETH, which means that this amount of stacked ether is a theoretical maximum of sorts.

The proposal also estimates the annual return for various quantities of validating ether. For instance, if only 1 million ETH was staked with this configuration, validators would receive an annual return of 18.1%. The community on Reddit has reacted to the proposal seemingly well, with many defining the rates as more reasonable than the previous ones.

Ethereum researcher Justin Drake estimated that after PoS and sharding have been implemented — with 32 million ETH staked — the validators would receive a base return of about 3.2%. This number is equivalent to about 1% of the total supply.

Still, the upcoming Ethereum Improvement Proposal 1559 implementation would mean that a portion of the transaction fees would be burnt. Thus, Drake estimates that with 1,000 ETH spent on gas per shard each year, the inflation would be equivalent to about .5%.

As Cointelegraph reported at the end of last year, Buterin previously declared that future blockchains with sharding based on proof-of-stake will be “thousands of times more efficient.”

More recently, in March, Buterin also argued that the crypto community should evolve beyond the individualism associated with its early cypherpunk days, and instead harness technology to create new, equitable and innovative systems with positive social impact.