The security of the Ethereum network is built on economic incentives: validators stake ETH to participate in consensus and receive newly issued ETH as rewards. This mechanism is known as the "security budget." However, as the network evolves, issues such as the sustainability of validator rewards, changes in network revenue sources, and the management of Foundation funds have sparked widespread discussion about whether "profit is sufficient to ensure security."
Core of the Security Budget: Staking and Rewards
Under the Proof of Stake mechanism, Ethereum's security primarily relies on the amount of ETH staked. These assets serve as collateral, and validators face penalties (slashing) if they misbehave (e.g., double-signing). To incentivize honest behavior, the network issues new ETH as rewards to validators.
According to data from August 2026, approximately 41.9 million ETH were staked at that time, accounting for about 34.7% of the total supply. The annualized staking yield on the consensus layer was close to 2.6% at that time. This yield is a key economic parameter for attracting and retaining validator participation, thereby ensuring network security.
Current Challenges and Controversies
While the staking system functions well, several factors have brought the "security budget" into focus:
- Changes in Revenue Structure: Analysis indicates that Ethereum mainnet revenue from Layer-2 networks significantly decreased from approximately $113 million in 2024 to about $10 million in 2025. This means that despite the thriving Layer-2 ecosystem, the direct revenue contribution to mainnet security is decreasing.
- Reward Adjustment Proposal: EIP-8363, a proposal that emerged in August 2026, suggests gradually reducing validator rewards to zero as the staking ratio increases, aiming for net-zero issuance at high staking rates. This proposal sparked intense debate within the developer community, considered one of the most significant monetary policy controversies since The Merge, but has not yet received public support from client teams.
- Foundation Fund Management: Some community members criticize the Ethereum Foundation for not fully utilizing its ETH reserves. For example, Marc Zeller, founder of Aave Chan Initiative, believes the Foundation should generate returns by staking its ETH reserves to fund core development, rather than funding projects with less impact.
Perspectives and Solutions from Various Parties
The community has proposed different approaches to ensure Ethereum's long-term security:
- Mechanism Optimization: Ethereum co-founder Vitalik Buterin once proposed researching new anti-correlation reward and penalty mechanisms aimed at improving the profitability of independent stakers in the long term and promoting decentralization.
- Social Layer Security: Supporters point out that the Ethereum PoS system possesses social coordination capabilities that Bitcoin PoW does not. The community can identify and punish attackers through social consensus, forming an additional layer of security. Ethereum Foundation researcher Justin Drake estimated in May 2025 that the cost of a 51% attack on Ethereum could be as high as approximately $44.8 billion, significantly higher than the estimated cost of a similar attack on Bitcoin at that time.
- Market View: Institutions such as BlackRock's iShares emphasize the potential returns staking offers to holders and believe that as the validator set expands and decentralization increases, network security will also be enhanced.
Conclusion: Continuous Balance and Evolution
The proposition that "Ethereum's profit is insufficient to guarantee security" is essentially a question about the long-term sustainability of the network's economic model. It involves multiple dimensions, including issuance policy, the fee market, the value flow distribution between the Layer 2 ecosystem and the mainnet, and the efficiency of governance fund utilization.
Currently, the Ethereum network is stable with a healthy staking ratio, but discussions about the security budget reflect the community's foresight for the future. Regardless of whether specific proposals like EIP-8363 pass, related debates will drive Ethereum to continuously seek the optimal balance between security, decentralization, and sustainability in its economic model design. The network's long-term security will ultimately depend on the community's ability to reach and execute robust social consensus on these critical economic parameters.
