Aave founder Stani Kulechov and Sharplink have opposed EIP-8363, a draft Ethereum proposal that would burn validator rewards down to nothing as more $ETH is staked.
The two DeFi stakeholders are standing against a group of Ethereum Foundation researchers over how the network should pay the people who secure it.
Who is against the Tapered Issuance Burn?
The proposal, named “Tapered Issuance Burn,” that calls for a system where the network would destroy a growing share of rewards given to validators, was posted on GitHub on August 4, 2026.
When staking reaches about 60.25 million $ETH, which is close to half of all supply, the burn would hit 100%, and new-issuance yield would disappear. At that point, validators would only earn from transaction tips and maximum extractable value (MEV).
Currently, about 41.5 million $ETH is staked, which is roughly 34% of supply. If EIP-8363 were to activate now, validator income would drop from roughly 2.68% to about 1.19%, representing a cut of about 55%.
The proposal is still a draft and has not been accepted into any upgrade. Cryptopolitan’s earlier reporting states that the authors suggested the new system be introduced over an 18-month period to soften the blow.
Big DeFi players are against reducing staking rewards because it has become a base interest rate for the Ethereum economy. Liquid staking tokens like stETH and eETH, worth about $35 billion, are used as collateral across lending markets.
Joseph Chalom, the CEO of Sharplink, posted his concerns on X, writing that if staking rewards drop, validators might actually lose money after paying for equipment, electricity, and other costs.
He also said that $ETH’s ability to earn rewards is one reason big investors choose it over other cryptocurrencies that don’t pay anything. And he argued that staking rewards are not really a cost—they’re just $ETH moving from one holder to another.
The proposal coincides with a wave of institutional building, including a Robinhood layer-2, BlackRock (NYSE: BLK) tokenizing a money-market fund, and a BNY (NYSE: BK) and Galaxy Digital staking partnership.
Kulechov echoed these concerns on X, calling Sharplink “one of the largest Ethereum ecosystem supporters and funders” and endorsing Chalom’s points on feasibility and timing.
“Save $ETH staking,” he wrote, warning that compressing liquid staking token yields could undermine a large slice of DeFi lending markets.
Ether.fi CEO Mike Silagadze offered a $1 million bet that the proposal would concentrate validators if adopted. He argued that solo stakers exit when yields fall, while large custodians like Coinbase (NASDAQ: COIN) and Binance keep staking near-zero-cost customer $ETH.
What does the proposal want to achieve, and who supports it?
The six authors, pintail, Jérôme de Tychey, dapplion, pa7x1, Ladislaus von Daniels, and Justin Drake. argue that the current system has no “off switch.”
Even if all $ETH were staked, the yield would not fall below roughly 1.5% annually. This creates a “dilution tax” for holders who do not stake and could push more $ETH toward large custodians and liquid staking providers.
They argue that their proposed method would remove the incentive for unlimited stake growth and protect $ETH’s neutrality as an asset.
On the August 6 All Core Devs call, the presenting author revealed that they are considering withdrawing it from Hegotá consideration. The selection process for proposals is estimated to run until November 8, 2026, with the Hegotá upgrade projected for Q2 2027.
ARK Invest’s research director Lorenzo Valente pushed back on critics of a related issuance change, saying ETF issuers focus on assets under management and take rates rather than chasing yield.
