Odaily Planet Daily report: Aave founder Stani Kulechov published a lengthy article stating that Ethereum’s EIP-8361 progressive issuance burn proposal has systemic issues. The proposal aims to gradually burn consensus layer issuance rewards, reducing the net staking yield to zero when the total amount of staked ETH reaches 60.25 million, approximately 50% of the total supply.
Stani Kulechov believes that the secondary ripple effects of this proposal have not been adequately modeled and could undermine the foundational elements of the Ethereum ecosystem across multiple dimensions. He argues that the zero-reward mechanism may exacerbate centralization in staking, as individual validators—burdened by fixed costs such as hardware and electricity—will be the first to exit, while non-revenue-driven entities like ETF issuers, exchanges, and institutional capital will remain. Additionally, since MEV rewards are unaffected by the proposal, this will further amplify the advantages of leading professional operators.
He also noted that individual stakers will face tax and operational risks. If tax authorities levy taxes on the full amount distributed and treat the burned portion as a capital loss, home nodes may incur after-tax losses; under unchanged penalty standards for failures, with net returns reduced, the maximum recovery period for node failures could be extended by up to 14 times.
Stani Kulechov stated that staking yields serve as the on-chain benchmark for ETH interest rates; a decline in yields could remove the pricing anchor for DeFi lending and fixed-income markets, potentially redirecting on-chain capital toward stablecoins offering 4% to 5% annualized returns. For institutional investors, predictable yields represent ETH’s core competitive advantage over BTC; once yields approach zero and volatility increases, ETH’s differentiation as a store of value will diminish. He also noted that, following the implementation of the proposal, MEV’s share of validator total income could rise from the current 7% to nearly 30%, potentially incentivizing operators to prioritize censorship-friendly relay nodes and undermining Ethereum’s trusted neutrality. If combined with a subsequent MEV destruction mechanism, validator income could be nearly eliminated.
Stani Kulechov recommends that proposers publish individual node after-tax yield assessments, tax opinions from major jurisdictions, and a DeFi ecosystem cascade risk model, and establish a non-zero net yield floor. He believes that measures should directly address staking concentration rather than suppressing yields for all validators.