The Ethereum Research forum has published a proposal titled Validator Redirected Revenue. The initiative suggests allowing up to 10% of staking rewards to be redirected towards ecosystem funding through a hard fork.
If 51% of votes support a rate above 0%, it will become mandatory for all validators.
According to the authors, with 35 million to 40 million ETH staked and a yield of 1.91%, validators receive about 700,000 ETH annually. Redirecting 5–10% could provide the ecosystem with an additional 50,000–70,000 ETH.
Recipients of the funds would be determined through a distribution contract. Validators could set addresses and shares, with preferences locked at the execution level.
Every 128 blocks (approximately every five minutes), a new distribution option can be proposed. The one that best matches the majority of validators’ preferences will remain in effect.
The selection model is described as a “king of the hill” approach, finding a winner through pairwise comparison of alternatives.
The authors listed several risks associated with this model:
- “Cartelization” of validators;
- Conflict of interest between staking operators and ETH holders;
- Excessive issuance.
Currently, about 90% of coins are locked through operators rather than individual participants. With coordination among major platforms, the rate could theoretically be raised to the maximum 10%, the proposal states.
Background and Objectives
According to the authors, the aim of the publication is to spark a discussion on the underfunding of “public goods” in Ethereum, rather than to push a specific model.
They describe the issue as a coordination failure: infrastructure, research, security, and tools are needed by all, but individual participants are reluctant to pay alone while others benefit “for free.”
“Everyone benefits from common improvements, but no participant wants to pay when others can enjoy the advantages for free. This creates persistent inefficiencies that weaken Ethereum’s long-term competitiveness,” the proposal states.
Currently, structural costs are often borne by the Ethereum Foundation, donors, or individual teams. They also describe a closed loop: concerns about future funding lower expectations for Ethereum’s success, pressure ETH valuation, and lead to a decline in the asset’s price.
Earlier, in June, former Ethereum Foundation employee Trent Van Epps warned of a potential funding crisis for the blockchain.
