Bitwise estimated newly issued Ether (ETH) supplied 96.3% of Ethereum’s average gross annualized staking yield in the third quarter of 2026, underscoring validators’ reliance on protocol rewards as transaction-related income weakened.
The firm assigned 2.53 percentage points of the 2.63% rate to consensus rewards. Transaction priority fees and maximal extractable value together added 0.10 points. Bitwise calculated the gross annualized average from daily reward rates weighted by active effective balance, before operator fees. It is an annualized rate, not a payout earned during the three-month quarter.
For Ethereum users, lower transaction costs accompanied the decline in transaction-related rewards. Bitwise found that the average cost across four common transaction types fell to $0.45 from $1.35 a year earlier. It attributed the drop mainly to expanded block capacity, which reduced competition for space in blocks. Cheaper transactions meant less fee-related income for stakers.
Meanwhile, more Ether was committed to staking. At quarter-end, active validators held 43.80 million ETH, equal to 35.9% of supply, in figures Bitwise credited to itself and Allium. The average gross annualized rate declined from 2.81% in the second quarter to 2.63% in the third. The reward breakdown adds context to Ethereum’s record validator balance and falling yield.
The large issuance share also figures in a debate over how Ethereum sets validator rewards. EIP-8363 (Tapered Issuance Burn) proposes burning a larger fraction of those rewards as the share of ETH staked rises. The proposal cites Ethereum’s existing EIP-1559 fee burn as a complementary mechanism.
In a Sept. 7 assessment, the Ethereum Foundation Protocol Cluster recommended leaving EIP-8363 out of the Hegotá upgrade and called for a broader review of issuance policy. That recommendation addressed the upgrade’s scope, not the proposal’s ultimate merits. The Foundation set no date for the review.
