Aave founder joins Sharplink in opposing proposal to reduce staking reward
- Aave’s Stani Kulechov joined Sharplink in opposing EIP-8363.
- The draft Ethereum proposal would burn a rising share of validator rewards until staking yield hits zero.
- The authors have suggested an 18-month acclimation period for the proposed system.
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.
The smartest crypto minds already read our newsletter. Want in? Join them.
FAQs
What is EIP-8363?
It is a draft Ethereum Improvement Proposal called "Tapered Issuance Burn," submitted August 4, 2026, that charges validators a fraction of their rewards and burns it, with the fraction rising to 100% once about 60.25 million ETH (near half the supply) is staked.
Why does Sharplink oppose it?
Sharplink, whose CEO is Joseph Chalom, argues the burn would raise the cost of on-chain capital and hurt DeFi, remove a reason institutions hold ETH, cut off issuance that funds network security, and arrive as institutional activity on Ethereum is growing.
Is the proposal going to be adopted?
No decision has been made; it remains a draft with no upgrade slot, a validator survey found 99.77% opposed, and by the August 6 All Core Devs call the next step recorded was for the presenting author to consider withdrawing it from Hegotá consideration.
Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
Hannah Collymore
Hannah is a writer and editor with nearly a decade of blog writing and event reporting experience in the crypto space. At Cryptopolitan, Hannah contributes to the news page, reporting and analyzing the latest developments in DeFi, RWA, crypto regulation, AI and frontier tech industries. She graduated from Arcadia university with a degree in Business Administration.
