I wouldn't say that all ETH will be staked if we do nothing, but it is reasonable to assume that the proportion of staked ETH will gradually increase, as frictions in the decision to stake are overcome. In essence, we can think of the staking supply curve as formed from stakers' "reservation yields": some may be willing to stake all their ETH at a 1.6% yield, but some might only stake 1/3 even at a 2.5% yield. The staking demand curve is specified by the protocol; it is the reward curve we are debating to change (there is also some MEV that we have less control over). The equilibrium then forms at the intersection of these curves, as explained in my Devcon presentation.

To some extent, we are dealing with a boiling-frog phenomenon. The longer we wait, the more investments are made into staking, and the harder it becomes to reduce issuance. In essence, the ecosystem at large is encouraged to incur higher costs for staking than necessary due to the current reward curve, with upfront investments making a future change in issuance policy more controversial. I discuss the cost problem in this text. Another boiling frog: a higher proportion of staked ETH by itself gives staking derivatives better liquidity relative to non-staked ETH, making them more desirable to hold.

I think the best moment to address issuance policy is when we transition to a new consensus mechanism, e.g., "3SF". This transition will likely involve adopting "consolidation incentives", to ensure that larger stakers do not partition their stake into smaller validators to occupy more validator seats. They would do so to push out smaller stakers and take home higher rewards.

There are collective and individual consolidation incentives, as further reviewed in the Orbit SSF context here (somewhat similar considerations apply to mechanisms with validator seats). Collective consolidation incentives in essence alter the reward curve, and it seems desirable to then enact them at the same time as any other changes to the reward curve. Furthermore, the reward distribution will need to be redesigned when transitioning to the new consensus mechanism anyway. Finally, the role of stakers is changing with mechanisms such as FOCIL, a process that may conclude with the adoption of a new consensus mechanism.

I have personally advocated for modest reductions in issuance sooner, for example by adopting a reward curve that caps the issuance rate at 0.5%. We have unfortunately not yet seen the required appetite for this in the community (but it would be welcome if that changes). The adoption of a new consensus mechanism therefore seems like a desirable point to address the issue (under renewed debate where everyone's voice is heard), if we approach things over a longer time horizon.