Ethereum Proposal EIP-8363 to Reduce Staking Rewards to Zero Draws Industry Backlash, Pulled from Upgrade

Aug 8, 2026

Ethereum core developers pulled the controversial EIP-8363 proposal from the Hegotá upgrade on August 6, 2026, following intense industry backlash. Introduced by Justin Drake and Jérôme de Tychey, the proposal aimed to burn validator rewards to zero once staked ETH reached 60.25 million (roughly 50% of supply). SharpLink CEO Joseph Chalom and Aave founder Stani Kulechov led the opposition, warning the change would devastate the $35 billion liquid staking market and disrupt DeFi collateral systems.

EIP-8363 proposal withdrawal

▪The EIP-8363 proposal, also referred to as EIP-8361 or Tapered Issuance Burn, was introduced on August 4, 2026, by Justin Drake of the Ethereum Foundation and Jérôme de Tychey.
▪Ethereum core developers pulled the EIP-8363 proposal from the upcoming Hegotá upgrade on August 6, 2026, following intense community backlash.

Validator reward burn mechanism

▪If adopted, the EIP-8363 reward reduction would be phased in over 548 days in 64 steps, representing an 18-month transition period.
▪Under the EIP-8363 model, the net consensus yield reaches zero at approximately 49.5% of the modeled ETH supply, which is commonly referred to in the industry as the 50% staking ratio.
▪The EIP-8363 proposal outlines a mechanism to progressively burn a larger share of validator consensus rewards as the total amount of staked ETH rises, reducing net consensus yield to zero at 60.25 million ETH.

Industry opposition to proposal

▪SharpLink CEO Joseph Chalom launched a public campaign against EIP-8363 on August 7, 2026, arguing that zero yield would damage the $35 billion liquid staking market and eliminate Ethereum's yield advantage over Bitcoin.
▪Aave founder Stani Kulechov opposed EIP-8363, warning that capping staking rewards at 0% would make yields unpredictable, weaken institutional demand, and disrupt DeFi borrowing and collateral markets.

Staking market concentration risks

▪Lido Labs research head Greg Koumoutsos warned that eliminating native yields would price out solo stakers who cannot survive on thin transaction fee margins, leading to increased validator centralization.
▪EIP-8363 proponents argue that lowering yields is necessary because the current curve overpays for network security and encourages stake concentration among large custodians and exchanges.

Ethereum issuance model debate

▪Proponents of EIP-8363 calculate that without intervention, staked ETH could exceed 70 million ETH by January 2028, representing over 55% of the total supply.
▪As of August 8, 2026, network snapshots showed approximately 41.18 million ETH staked out of a total supply of 120.68 million ETH, representing a staking ratio of roughly 34.13%.