diff --git a/stream/stream.go b/stream/stream.go
index fe31f6b..b00757b 100644
--- a/stream/stream.go
+++ b/stream/stream.go
@@ -143,10 +143,15 @@ func NewEncoderFromSD(src io.Reader, sdBlob *SDBlob) *Encoder {
 // TODO: consider making a NewPartialEncoder that also copies blobinfos from sdBlobs and seeks forward in the data
 // this would avoid re-creating blobs that were created in the past
 
-// Next returns the next blob in the stream
+// Next reads the next chunk of data, encodes it into a blob, and adds it to the stream
+// When the source is fully consumed, Next() makes sure the stream is terminated (i.e. the sd blob
+// ends with an empty terminating blob) and returns io.EOF
 func (e *Encoder) Next() (Blob, error) {
 	n, err := e.src.Read(e.buf)
 	if err != nil {
+		if errors.Is(err, io.EOF) {
+			e.ensureTerminated()
+		}
 		return nil, err
 	}
 
@@ -171,16 +176,10 @@ func (e *Encoder) Stream() (Stream, error) {
 	for {
 		blob, err := e.Next()
 		if err != nil {
-			if !errors.Is(err, io.EOF) {
-				return nil, err
+			if errors.Is(err, io.EOF) {
+				break
 			}
-
-			// if stream is not terminated, terminate it
-			if e.sd.BlobInfos[len(e.sd.BlobInfos)-1].Length > 0 {
-				e.sd.addBlob(Blob{}, e.nextIV())
-			}
-
-			break
+			return nil, err
 		}
 
 		s = append(s, blob)
@@ -221,6 +220,16 @@ func (e *Encoder) SourceSizeHint(size int) *Encoder {
 	return e
 }
 
+func (e *Encoder) isTerminated() bool {
+	return len(e.sd.BlobInfos) >= 1 && e.sd.BlobInfos[len(e.sd.BlobInfos)-1].Length == 0
+}
+
+func (e *Encoder) ensureTerminated() {
+	if !e.isTerminated() {
+		e.sd.addBlob(Blob{}, e.nextIV())
+	}
+}
+
 // nextIV returns the next preset IV if there is one
 func (e *Encoder) nextIV() []byte {
 	if len(e.ivs) == 0 {
diff --git a/stream/stream_test.go b/stream/stream_test.go
index 8375787..ea3cef6 100644
--- a/stream/stream_test.go
+++ b/stream/stream_test.go
@@ -6,7 +6,10 @@ import (
 	"crypto/sha256"
 	"crypto/sha512"
 	"encoding/hex"
+	"io"
 	"testing"
+
+	"github.com/lbryio/lbry.go/v2/extras/errors"
 )
 
 var testdataBlobHashes = []string{
@@ -135,6 +138,52 @@ func TestMakeStream(t *testing.T) {
 	}
 }
 
+func TestEmptyStream(t *testing.T) {
+	enc := NewEncoder(bytes.NewBuffer(nil))
+	_, err := enc.Next()
+	if !errors.Is(err, io.EOF) {
+		t.Errorf("expected io.EOF, got %v", err)
+	}
+	sd := enc.SDBlob()
+	if len(sd.BlobInfos) != 1 {
+		t.Errorf("expected 1 blobinfos in sd blob, got %d", len(sd.BlobInfos))
+	}
+	if sd.BlobInfos[0].Length != 0 {
+		t.Errorf("first and only blob to be the terminator blob")
+	}
+}
+
+func TestTermination(t *testing.T) {
+	b := make([]byte, 12)
+
+	enc := NewEncoder(bytes.NewBuffer(b))
+
+	_, err := enc.Next()
+	if err != nil {
+		t.Error(err)
+	}
+	if enc.isTerminated() {
+		t.Errorf("stream should not terminate until after EOF")
+	}
+
+	_, err = enc.Next()
+	if !errors.Is(err, io.EOF) {
+		t.Errorf("expected io.EOF, got %v", err)
+	}
+	if !enc.isTerminated() {
+		t.Errorf("stream should be terminated after EOF")
+	}
+
+	_, err = enc.Next()
+	if !errors.Is(err, io.EOF) {
+		t.Errorf("expected io.EOF on all subsequent reads, got %v", err)
+	}
+	sd := enc.SDBlob()
+	if len(sd.BlobInfos) != 2 {
+		t.Errorf("expected 2 blobinfos in sd blob, got %d", len(sd.BlobInfos))
+	}
+}
+
 func TestSizeHint(t *testing.T) {
 	b := make([]byte, 12)