preferred on
Points of Focus
- EIP-8363 would burn more validator rewards as staking grows.
- Stani Kulechov said the plan could hurt ETH borrowing and DeFi.
- Supporters believe lower rewards could stop large staking firms from gaining too much power.
Aave founder Stani Kulechov posted an opinion on X against an Ethereum plan to cut validator rewards as staking grows.
Ethereum Improvement Proposal (EIP) 8363 would burn a growing share of newly issued Ether (ETH) paid to validators. The burn would reach 100% if about half of all ETH was staked. At that point, validators would receive no new ETH from consensus, though fees and other rewards would remain.
Unfortunately this proposal doesn't achieve the outcome it tries to achieve and is actually hurtful for Ethereum.
It caps Ethereum staking rewards to 0% when over 50% of supply staked.
What this mean is that Ethereum staking yield becomes unpredictable and even fully… https://t.co/IYUst52Dt3
— Stani (@StaniKulechov) August 4, 2026
Kulechov said the plan could make staking income hard to predict. He also warned that it may hurt ETH borrowing, large investors, and decentralized finance (DeFi) apps.
Why Ethereum researchers want a burn
Validators lock up Ethereum to help confirm network transactions. In return, Ethereum rewards them with newly created ETH, similar to how earning interest from a savings account works.
About one in three ETH is now staked on the network, securing it and earning rewards. As more ETH becomes staked, reward percentages fall, though they’ll never drop to zero. However, many holders do not want to run a validator themselves due to technical and equipment restrictions, in addition to a 32-ETH minimum requirement. Instead, they use large exchanges or staking companies that handle the work for them.
Experts worry that a few companies could eventually run a large share of Ethereum’s validators. This would not mean they own Ethereum, but the network could become too centralized.
Why the proposal divides Ethereum
The proposal would work like a dimmer switch. As more ETH is staked, Ethereum would burn a larger share of the new ETH meant for validators. If half of all ETH were staked, validators would receive no newly issued ETH, though fees and other payments would remain.
Proposal supporters say lower rewards would slow staking growth before a few providers become too powerful. The change would also create fewer new ETH, limiting dilution for people who do not stake.
🚨 New EIP: Tapered Issuance Burn
We just submitted an EIP to ethereum/EIPs: a minimal, market-driven fix to Ethereum's issuance policy removing the incentive for stake growth beyond 50% of ETH supply.
EIP-8361 by @pintail_xyz, @jdetychey, @dapplion, @pa7x1, @ladislaus0x &… pic.twitter.com/g1uzWPycQ4— Jerome de Tychey 🦇🔊 (@jdetychey) August 4, 2026
Kulechov worries the change would also hurt DeFi platforms. Some users borrow ETH and stake it to try to earn more than their loan costs. For example, if staking pays 3% while an ETH loan costs 2%, the user can technically keep the 1% difference. If staking rewards fall near zero or become hard to predict, that balance is off. Demand for ETH loans could then fall, hurting lending apps such as Aave.
He also warned that large investors seeking steady returns may choose another platform. That said, it’s important to note that EIP-8363 is still a draft. If adopted, it would be introduced over 18 months. Developers must decide whether lower issuance is worth the risk of weaker demand for staking, ETH loans, and DeFi.
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