ME News reports that on August 5 (UTC+8), Aave founder Stani Kulechov published a detailed article stating that Ethereum’s EIP-8361 progressive issuance burn proposal contains systemic flaws. The proposal aims to gradually burn consensus-layer issuance rewards, reducing the net staking yield to zero once the total amount of staked ETH reaches 60.25 million, approximately 50% of the total supply. Stani Kulechov argues that the secondary and tertiary ripple effects of this proposal have not been adequately modeled and could undermine the foundational integrity of the Ethereum ecosystem across multiple dimensions. He contends that a zero-yield mechanism may exacerbate centralization in staking: individual validators, burdened by fixed costs such as hardware and electricity, will be the first to exit, while non-yield-driven entities—such as ETF issuers, exchanges, and institutional capital—will remain. MEV revenues, unaffected by the proposal, will further amplify the advantages of large professional operators. He also warns that individual stakers will face increased tax and operational risks. If tax authorities assess taxes based on the full issuance amount while treating the burned portion as a capital loss, household nodes could incur post-tax losses. Under unchanged slashing penalties, the maximum time required to recover from node failures could increase by up to 14 times as net yields decline. Kulechov notes that staking yield serves as the benchmark for on-chain ETH interest rate pricing. A reduction in yield could destabilize DeFi lending and fixed-income markets by removing their pricing anchor, potentially driving on-chain capital toward stablecoins offering 4% to 5% annualized returns. For institutional investors, predictable yield is a core competitive advantage of ETH over BTC; once yield drops to zero and volatility rises, ETH’s differentiation as a store of value will diminish. He further points out that after implementation, MEV’s share of validator total income could rise from the current 7% to nearly 30%, incentivizing operators to prioritize relay nodes that support censorship, thereby eroding Ethereum’s trusted neutrality. If a subsequent MEV-burning mechanism is added, validator income could approach zero. Kulechov urges the proposal’s proponents to publish assessments of after-tax returns for individual nodes, tax opinions from major jurisdictions, and cascading risk models for the DeFi ecosystem, and to establish a non-zero net yield floor. He argues that direct measures should be taken to address staking concentration—not by suppressing yields across all validators. (Source: ODAILY)
Aave founder Stani Kulechov criticizes Ethereum EIP-8361 for zero staking yield.
KuCoinFlashShare
Summary
Aave founder Stani Kulechov criticized Ethereum’s EIP-8361 for driving staking yields toward zero, warning it could centralize validation and increase MEV’s share to nearly 30%. He stated that the EVM’s long-term sustainability is at risk if ETH loses its advantage over BTC. Kulechov also highlighted tax and operational risks for individual validators. He noted that zero-knowledge proofs could help reduce dependence on staking rewards by enhancing efficiency and transparency.
Source:Show original
Disclaimer: The information on this page may have been obtained from third parties and does not necessarily reflect the views or opinions of KuCoin. This content is provided for general informational purposes only, without any representation or warranty of any kind, nor shall it be construed as financial or investment advice. KuCoin shall not be liable for any errors or omissions, or for any outcomes resulting from the use of this information.
Investments in digital assets can be risky. Please carefully evaluate the risks of a product and your risk tolerance based on your own financial circumstances. For more information, please refer to our Terms of Use and Risk Disclosure.