SharpLink Ventures Opposes Ethereum EIP-8361 Proposal, Deeming It a DeFi Weakening Move Unfit for Current Timing

BlockBeats News, August 7th, SharpLink co-founder Joseph Chalom expressed his opposition to the Ethereum EIP-8361 proposal for "Tapered Issuance Burn." He pointed out that the proposal would significantly reduce network staking rewards. As the Ethereum staking ratio increases, validator rewards would be gradually burned until the staked amount reaches around half of the total supply, at which point the rewards would drop to zero. Validators would then rely only on the current ~15% transaction fee for operation, weakening the DeFi ecosystem. This would cause ETH to lose its native revenue advantage over Bitcoin, increase on-chain capital costs, and eliminate some small and medium-sized staking operators.

Chalom believes that the timing of the proposal is particularly unfavorable. Currently, Ethereum is gaining widespread institutional adoption, including Robinhood building a new chain on the Ethereum layer 2 network, BlackRock tokenizing its money market fund shares on-chain, and BNY Mellon introducing staking services to their custody platform through a partnership with Galaxy Digital. He stated that SharpLink agrees that ETH should become more scarce over time but advocates for achieving this goal through the existing base fee burn mechanism, opposing fundamental adjustments to the protocol's economic foundation at this stage.

EIP-8361 proposes to gradually increase the percentage of validator rewards burned as the ETH staking ratio rises, aiming to zero out the net issuance reward at the consensus layer when staking reaches around 50% of the supply to eliminate further staking incentives.