Ethereum DeFi leaders oppose staking reward proposal EIP-8361

A proposal known as EIP-8361 has drawn criticism from the Ethereum DeFi establishment. The measure, championed by researcher Justin Drake and others, would remove staking rewards once staked ETH surpasses 50% of circulating supply, with the stated goal of making Ethereum more deflationary and appealing as a store of value for solo stakers.

Stani Kulechov, CEO of Aave lending protocol, rejected the plan, arguing it would undermine institutional adoption and expose solo stakers to unpredictable yields while damaging DeFi borrowing strategies. Mike Sligadze, CEO of EtherFi, questioned whether a 0.8% reduction in annual issuance would justify the damage to the broader ecosystem, predicting a capital exodus from seven of the top ten DeFi protocols. Lorenzo Valente, Fidelity's director of research, echoed concerns that credit-dependent platforms including Aave, Morpho, Pendle and Ethena would be affected.

Sligadze also disputed arguments about liquid staking tokens threatening ETH's value, noting they serve only about a quarter of staked ETH and cannot replace the asset's role in finance. He characterised the proposal as harmful to decentralisation, adoption and network credibility.

Some observers, including analyst Ryan Berckmans, acknowledged the case for reducing issuance but questioned eliminating it entirely. Grayscale had previously supported capping staking rewards to strengthen ETH value, though without specifying a mechanism. Current figures show ETH issuance at 0.8% annually with stakers earning 2.62%, while staking participation has reached record levels of 41.4 million ETH, or 34.4% of total supply.