A group of Ethereum researchers and developers has submitted a proposal to change the network's emission policy. The draft, called Tapped Issue Burn, received the preliminary number EIP-8363. Among the authors of the initiative are Lodestar team member Jerome de Tichy and Ethereum Foundation researcher Justin Drake. The proposal involves the gradual burning of a portion of the validators' consensus awards as the share of ETH in staking grows. When the figure of 60.25 million ETH is reached, the deduction can reach one hundred percent of all charges. This volume represents approximately fifty percent of the current coin supply. The changes are planned to be introduced gradually over the course of eighteen months. The authors believe that such a mechanism will eliminate the lower limit of staking profitability. This will reduce the incentive to block an increasing proportion of available coins on the network.

The current emission curve does not turn off the incentive to staking, even with a very high proportion of blocked coins. According to the developers, the profitability does not fall below one and a half percent per annum, even when the entire supply is blocked. Jerome de Tichy stated the endless nature of the current incentive to participate in the consensus. The authors see a risk of increased ETH concentration among large custodians and exchanges. The further growth of staking may displace regular ether from decentralized finance. Liquid staking tokens carry additional risks of specific issuers or smart contracts. Burning some of the rewards should protect the neutrality of ETH as the underlying asset. This will also reduce the dilution of the shares of holders who are not involved in staking. The ever-increasing issue represents a dilution tax for each holder.

The initiative has already faced significant criticism from developers and founders of DeFi projects. Opponents warn of a potential blow to solo validators and institutional demand. The founder of Aave, Stani Kulechov, announced a possible weakening of the borrowing activity in DeFi. In his opinion, the proposal is actually harmful to the Ethereum ecosystem. The head of Ether Fi Mike Silagadze believes that solo-stakers will be most affected by the changes. Such participants usually have higher relative costs for maintaining the infrastructure. Critics point to the strengthening of the position of skeptics who consider the network to be run by a small group of insiders. Jerome de Tichy noted that users of large staking providers pay commissions to intermediaries. With a decrease in profitability, such services also lose their attractiveness to customers. EIP-8363 is still in the draft stage and is not included in the Hegota upgrade.

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The material has been prepared solely for informational purposes and does not constitute financial advice or recommendation.