A new draft proposal called EIP-8361 is sparking debate in the Ethereum community with its plan to change how staking rewards are delivered. The proposal would cut consensus layer issuance as more ETH is staked and, once the amount of staked ETH hits about 50% of the total supply, it would start burning all those rewards. Supporters say this would help reduce dilution and keep ETH as the ecosystem’s most neutral asset. However, critics warn that executing this proposal might create new challenges for staking, institutional involvement, and decentralized finance (DeFi).
Aave founder Stani Kulechov is one of the proposal’s opponents. He does not think Ethereum is focusing on the right priorities. Kulechov argues that cutting staking rewards would not address the protocol’s biggest needs and could make ETH less attractive as an asset. He has added another perspective to the conversation about where Ethereum should go next and what compromises the network should make in its monetary policy.
Stani Kulechov Says Ethereum Should Focus on Core Challenges
Stani Kulechov says Ethereum should not get distracted by cutting staking rewards, reducing issuance, or trying to game staking insurance. From his perspective, these issues are not what the network needs to solve right now. Ethereum is still unfinished when it comes to serving the financial system, Kulechov said. He believes the protocol’s main priorities should be privacy, scalability, and security. It needs major breakthroughs in these areas, plus the right leadership to pull it all together.
At the application layer, Kulechov sees an even bigger opportunity. He thinks Ethereum should keep growing the use cases it was built for: stablecoins, DeFi, and real world assets that help bring the financial system on chain. Ethereum has come a long way over the past decade, but Kulechov argues that the final stage of development matters the most. Instead of changing staking economics, he wants the community to focus on technology improvements and broader adoption of financial applications that run on Ethereum.
Why Kulechov Opposes the EIP-8361 Proposal
Kulechov thinks EIP-8361 would not achieve what its authors intend and could hurt several parts of the Ethereum ecosystem. The proposal would cap staking rewards at 0% once more than half of all ETH is staked, he pointed out. If staking yields become unpredictable, lots of people could find it unprofitable to participate.
Predictable staking rewards are important for institutional investors thinking about taking positions in ETH, according to Kulechov. When rewards depend on how much of the supply is staked, no one knows exactly what future returns will look like. He says this uncertainty makes it harder for ETH to compete with other networks that offer more predictable income.
Solo validators could be especially vulnerable if rewards turn erratic or vanish, Kulechov said. They may face bigger hurdles than larger participants. He also raised concerns about the impact on DeFi. Staking yields power many ETH borrowing and yield strategies, and if rewards drop to zero, those strategies could disappear. Borrowing ETH would basically only make sense for those looking to short the asset.
Another point: staking would become the only way to earn ETH yield, which means people would have to lock their ETH instead of benefitting from instant withdrawals, which DeFi allows. And there is always the risk that the network reaches the 50% staked threshold, where rewards disappear altogether.
In an X post he stated, “From my personal take, this just makes ETH less viable as an asset and restricts its potential. I hope this proposal doesn’t move fwd, otherwise we see lot of people moving their interest in other networks. There are many who share the same view. Ethereum should not be punished for its growth.”
In the end, Kulechov argues the proposal would make ETH a weaker asset and limit its long term growth. He hopes it does not move forward, warning that it could push people to switch to other blockchain networks. His comments come while the Ethereum community is still debating questions about how to balance security, decentralization, monetary policy, and long term strategy, and which trade offs should shape Ethereum in the coming years.
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