diff --git a/contracts/libraries/storage/SSVStorageStaking.sol b/contracts/libraries/storage/SSVStorageStaking.sol
index 5ee0f04c..f650ea7b 100644
--- a/contracts/libraries/storage/SSVStorageStaking.sol
+++ b/contracts/libraries/storage/SSVStorageStaking.sol
@@ -35,6 +35,8 @@ struct StorageStaking {
     uint16 quorumBps;
     /// @notice The mapping of address to their unstake requests
     mapping(address => UnstakeRequest[]) withdrawalRequests;
+    /// @notice Fractional reward numerator carried between settlements (always less than PRECISION)
+    mapping(address => uint256) rewardRemainder;
 }
 
 library SSVStorageStaking {
diff --git a/contracts/modules/SSVStaking.sol b/contracts/modules/SSVStaking.sol
index 79e6e1e7..3365bab3 100644
--- a/contracts/modules/SSVStaking.sol
+++ b/contracts/modules/SSVStaking.sol
@@ -215,12 +215,16 @@ contract SSVStaking is ISSVStaking, SSVReentrancyGuard {
         uint256 idx = s.accEthPerShare;
         uint256 userIdx = s.userIndex[user];
 
-        uint256 pending;
+        uint256 scaledPending = s.rewardRemainder[user];
         if (bal != 0 && idx != userIdx) {
-            pending = (bal * (idx - userIdx)) / PRECISION;
-            if (pending != 0) {
-                s.accrued[user] += pending;
-            }
+            scaledPending += bal * (idx - userIdx);
+        }
+
+        uint256 pending = scaledPending / PRECISION;
+        s.rewardRemainder[user] = scaledPending % PRECISION;
+
+        if (pending != 0) {
+            s.accrued[user] += pending;
         }
 
         s.userIndex[user] = idx;
diff --git a/test/unit/SSVStaking/fractionalRewards.test.ts b/test/unit/SSVStaking/fractionalRewards.test.ts
new file mode 100644
index 00000000..e9bb62d5
--- /dev/null
+++ b/test/unit/SSVStaking/fractionalRewards.test.ts
@@ -0,0 +1,115 @@
+import { expect } from "chai";
+import type { NetworkConnection } from "hardhat/types/network";
+import type { HardhatEthersSigner } from "@nomicfoundation/hardhat-ethers/types";
+
+import { defaultStakingFixture } from "../../helpers/fixture-presets.ts";
+import type { NetworkHelpersType } from "../../common/types.ts";
+import { setupTestContext } from "../../common/helpers.ts";
+
+const PRECISION = 10n ** 18n;
+const ETH_DEDUCTED_DIGITS = 100_000n;
+const TOTAL_CSSV_SUPPLY = 10n ** 24n;
+const ACCOUNT_BALANCE = 1_000_000_000n;
+const FEE_STEP_PACKED = 9_000_000_000n;
+const ROUNDS = 10;
+
+describe("SSVStaking fractional reward settlement", () => {
+  let connection: NetworkConnection<"generic">;
+  let networkHelpers: NetworkHelpersType;
+
+  let attacker: HardhatEthersSigner;
+  let victim: HardhatEthersSigner;
+  let control: HardhatEthersSigner;
+
+  before(async function () {
+    ({
+      connection,
+      networkHelpers,
+      signers: [attacker, victim, control],
+    } = await setupTestContext());
+  });
+
+  const deployFixture = async () => defaultStakingFixture(connection);
+
+  async function impersonate(address: string) {
+    await connection.ethers.provider.send("hardhat_impersonateAccount", [
+      address,
+    ]);
+    await connection.ethers.provider.send("hardhat_setBalance", [
+      address,
+      "0x1000000000000000000",
+    ]);
+    return connection.ethers.getSigner(address);
+  }
+
+  async function transferWithProductionHook(
+    staking: any,
+    cssvToken: any,
+    cssvSigner: any,
+    from: HardhatEthersSigner,
+    to: string,
+    amount: bigint,
+  ) {
+    await staking
+      .connect(cssvSigner)
+      .onCSSVTransfer(from.address, to, amount);
+    await cssvToken.connect(from).transfer(to, amount);
+  }
+
+  it("preserves fractional rewards across unsolicited dust transfers", async function () {
+    const { staking, cssvToken } =
+      await networkHelpers.loadFixture(deployFixture);
+
+    const cssvSigner = await impersonate(await cssvToken.getAddress());
+
+    await staking.mockSetDaoTotalEthVUnits(0n);
+    await staking.mockSetEthNetworkFee(0n);
+    await staking.mockSetStakingEthPoolBalance(0n);
+    await staking.mockSetEthDaoBalance(0n);
+
+    await cssvToken.mint(victim.address, ACCOUNT_BALANCE);
+    await cssvToken.mint(control.address, ACCOUNT_BALANCE);
+    await cssvToken.mint(
+      attacker.address,
+      TOTAL_CSSV_SUPPLY - (2n * ACCOUNT_BALANCE),
+    );
+
+    const expectedIndexStep =
+      (FEE_STEP_PACKED * ETH_DEDUCTED_DIGITS * PRECISION) /
+      TOTAL_CSSV_SUPPLY;
+    expect(expectedIndexStep).to.equal(900_000_000n);
+
+    for (let round = 1; round <= ROUNDS; round++) {
+      await staking.mockSetEthDaoBalance(
+        FEE_STEP_PACKED * BigInt(round),
+      );
+
+      await transferWithProductionHook(
+        staking,
+        cssvToken,
+        cssvSigner,
+        attacker,
+        victim.address,
+        1n,
+      );
+    }
+
+    await transferWithProductionHook(
+      staking,
+      cssvToken,
+      cssvSigner,
+      attacker,
+      control.address,
+      1n,
+    );
+
+    expect(await staking.getAccEthPerShare()).to.equal(
+      expectedIndexStep * BigInt(ROUNDS),
+    );
+    expect(await staking.getUserAccrued(victim.address)).to.equal(9n);
+    expect(await staking.getUserAccrued(control.address)).to.equal(9n);
+    expect(await cssvToken.balanceOf(victim.address)).to.equal(
+      ACCOUNT_BALANCE + BigInt(ROUNDS),
+    );
+  });
+});