ETHEREUM WITHDRAWS PROPOSAL TO BURN A PORTION OF STAKING REWARDS FROM HEGOTA On October 1, co-author Jérôme de Tychey announced the withdrawal of EIP-8363 from the review process for the Hegota upgrade. - The proposal aimed to reduce issuance rewards for validators as the percentage of ETH staked increases, but will now be moved to a separate discussion process. 1. What did EIP-8363 seek to change? - The proposal intended to deduct and burn a portion of validator rewards, with the deduction rate increasing in proportion to the amount of ETH staked. - At a threshold equivalent to approximately 50% of total supply, issuance rewards would be fully offset by design; no new ETH would be issued, but validator income would not drop to zero, as transaction fees and MEV would still apply. => The authors’ goal was to discourage excessive staking and reduce dilution for non-staking ETH holders. 2. Why withdraw from Hegota? - According to de Tychey, industry stakeholders and developers agreed that the feature selection process for an upgrade is not the appropriate venue to decide on changes to issuance policy. - Debates continue around security, yield levels, validator centralization, and impacts on self-hosted node operators. The authors still believe a change is necessary but wish to conduct a dedicated evaluation process before seeking consensus. 3. Market implications - Withdrawing the proposal reduces the likelihood that this mechanism will lower staking yields in Hegota. However, this does not create new revenue streams for Lido or other liquid staking protocols, nor does it guarantee current APRs will remain unchanged. For non-staking holders, the proposed dilution-reduction mechanism has not been implemented. => I view this as a change in timing and process—not a final decision on ETH issuance policy. The core question remains: how much should issuance be reduced without disincentivizing small validator operators? - What do you think: should ETH issuance be reduced to prevent inflation, or should yields remain high enough to sustain validator network security?