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Ethereum researchers want to rein in staking, critics say it could backfire
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- DeepHorus
Ethereum researchers have unveiled a draft proposal, EIP-8363, that would sharply reduce validator rewards as the network’s staking ratio approaches 50%, sparking immediate backlash from developers and DeFi leaders. The proposal, authored by six researchers including Ethereum Foundation’s Justin Drake and Jérôme de Tychey, introduces a “tapered issuance burn” that would progressively burn an increasing fraction of validators’ consensus rewards. Once the amount of staked ETH hits a fixed threshold of 60.25 million ETH—roughly 50% of current supply—the deduction would reach 100%, with changes phasing in over 18 months.
The authors argue the current issuance curve never lets staking yield fall below 1.5%, even if all ETH were staked, creating an endless incentive to stake. With no changes, they warn that more than 55% of Ethereum’s supply could be locked in staking by 2028, concentrating ETH in large custodians and liquid staking providers. De Tychey said the proposal hardens “maximal neutrality and minimal dilution,” positioning Ethereum as a store of value while making supply growth bounded and predictable. Under the new policy, issuance would peak at 0.5% of ETH supply annually around 20% staked, then decline to zero at the threshold.
Support has come from Grayscale, whose head of research Zach Pandl said in May that limiting staking incentives would be “positive for the price of Ether over time.” However, critics argue the proposal punishes Ethereum’s growth and could backfire. Aave founder Stani Kulechov said reducing staking rewards would weaken institutional demand for ETH and disrupt DeFi borrowing activity, claiming it “doesn’t achieve the outcome it tries to achieve and is actually hurtful for Ethereum.”
Others worry about the impact on solo stakers, who have higher relative costs and are more vulnerable to reward cuts. Mike Silagadze, CEO of Ether.fi, said the proposal “will self evidently push out solo stakers who aren’t subsidized by the EF or others,” potentially concentrating control among large players. The publication of EIP-8363 just two days before the deadline for Ethereum’s Hegotá upgrade has also raised concerns about insufficient time to assess its tokenomic implications. As an early draft, the proposal remains far from implementation, but the debate highlights a growing tension between Ethereum’s security economics and its aspirations as neutral money.
