Ethereum (ETH) EIP-8361 Would Burn Staking Rewards at 50% Staked

Ethereum News

Ethereum (ETH) researchers have published EIP-8361, a draft monetary-policy change that would burn an increasing share of validator issuance as staked supply rises toward half of the network. The proposal text, reviewed by COINOTAG, says the burn rate would scale with the staking ratio until consensus-layer rewards are fully removed at about 60.25 million ETH, equivalent to roughly 50% of current supply. Under the model, annual issuance would peak near 0.5% of supply when about one-fifth of ETH is staked, then fall toward zero as participation increases. At a one-third staking ratio, the authors estimate annual supply would be about 570,000 ETH lower than under current rules, using a $1,800 price assumption. Six researchers and developers, including Ethereum Foundation researcher Justin Drake and co-author Jerome de Tychey, framed the plan as a response to an incentive structure that never switches off. They warned that, without change, more than 55% of ETH could be staked by 2028 in a worst-case scenario. The draft also outlines an 18-month transition rather than immediate implementation. It has not been approved or scheduled for a mainnet upgrade, and discussion around the Hegotá upgrade remains preliminary. The central question is whether ETH should keep encouraging staking growth or prioritize scarcity and neutrality for the native altcoin asset.

Aave founder Stani Kulechov emerged as one of the loudest critics, arguing that EIP-8361 would make Ethereum staking yields unpredictable and weaken institutional demand. In a public post, he said the network should not be penalized for growth and cautioned that a zero-consensus-reward environment would undermine many leveraged ETH strategies that rely on borrowing to amplify staking positions. His concern is particularly relevant for Aave, the largest decentralized lending market on Ethereum, where ETH-denominated collateral remains the largest supplied category. Protocol dashboard data shows Aave's total supplied assets stood near $26.3 billion on Aug. 6, recovering about $4.1 billion from a June low of $22.3 billion. ETH supplied to Aave was about $10.9 billion, or more than 40% of the total, while dollar assets were about $10.1 billion and Bitcoin-linked assets about $4.4 billion. Kulechov warned that if the base staking yield falls to zero, most borrowing strategies would lose economic logic, leaving short-selling as the main reason to borrow ETH. Aave ecosystem participant Mark Zeller also said major protocols, including Lido and ether.fi, should reject the change. The recovery followed Kelp DAO's April withdrawal halt and May restoration of rsETH bridge backing. The episode shows how monetary-policy design now directly touches Automated Market Maker (AMM) liquidity assumptions and broader DeFi risk appetite.

BlackRock's iShares Ethereum Trust ETF, trading as ETHA, will consolidate three existing shares into one after the sponsor approved the move on July 31 and disclosed it in a regulatory filing. The record date is Oct. 5, with Nasdaq trading expected to begin on Oct. 6 at the adjusted price. The filing makes clear that underlying asset value does not change; the split merely resets the share count and quoted price. Based on the filing's figures, ETHA was down more than 37% year to date at about $14.15 per share, reflecting ETH's decline from above $3,200 at the start of the year; ETH later traded above $1,900 on Aug. 5. The fund remained the largest product of its kind, with about $5.4 billion in net assets as of Aug. 4 and more than $11 billion in cumulative net inflows. After consolidation, the estimated trading price would be about $42.45, while shares outstanding would fall from roughly 384 million to 128 million. Analysts say the higher nominal price could narrow bid-ask spreads and improve the fund's trading economics for retail investors. The move also places ETHA in a more familiar listing range during a bear market for ETH-linked products, rather than signaling a change in fund holdings or fee structure.

COINOTAG's analysis: the three developments form one structural story: Ethereum's issuance policy is becoming the battleground for staking incentives, DeFi liquidity, and regulated fund access. The primary record remains the EIP-8361 draft text; no approved snapshot vote, quorum, turnout, or recorded outcome has been disclosed, and the proposal is unratified. That governance uncertainty is already spilling into market behavior, from Aave's $26.3 billion supplied base to ETHA's reverse split and $5.4 billion asset base. The issue is not an all-time-high narrative; it is whether Ethereum can limit issuance without pushing validation and yield further toward centralized intermediaries.