- Joseph Chalom warned EIP-8363 could reduce Ethereum’s native staking yield and weaken liquid staking assets used across DeFi lending markets.
- Chalom argued lower validator rewards could raise onchain capital costs and reduce ETH’s appeal to institutional investors and smaller validators.
- The SharpLink CEO favors controlling ETH supply through existing fee burns rather than reducing validator issuance as staking levels increase.
SharpLink CEO Joseph Chalom is opposing EIP-8363, a proposal that would reduce Ethereum’s validator rewards. Chalom said the plan could hurt DeFi, reduce ETH’s native yield and raise onchain capital costs. He made the case as Ethereum attracts major institutions, stablecoins and tokenized assets.
Chalom Raises DeFi And Staking Concerns
EIP-8363, known as “Tapered Issuance Burn,” would reduce Ethereum issuance over roughly 18 months. The proposal would burn more issuance as the amount of staked ETH increases. Chalom said Ethereum currently pays validators about 2.75% in newly issued ETH.
He added that transaction tips provide only about 15% of current staking yields. According to Chalom, lower rewards could affect DeFi because staking yield helps support liquid staking assets. He cited about $35 billion in liquid staking token value.
He said these assets serve as collateral across onchain lending markets. However, lower staking returns could raise the cost of capital and affect smaller validators. Chalom also said ETH’s native yield separates it from Bitcoin for institutional investors. He linked that feature to demand through ETPs, digital asset treasuries and private funds.
Ethereum Adoption Drives SharpLink’s Position
Chalom said Ethereum’s issuance supports validators, infrastructure teams and projects within its ecosystem. He added that SharpLink uses validators through Coinbase, Anchorage, Figment and Galaxy Digital.
The company also supports ether.fi, Linea and EigenCloud, according to Chalom. He argued that reducing issuance would limit capital circulating through Ethereum-related activities. Meanwhile, Chalom cited about $159 billion in stablecoins and more than $15 billion in tokenized assets on Ethereum.
He also referenced Robinhood’s Ethereum layer 2 and BlackRock’s tokenized BSTBL shares. BNY is also bringing staking to its institutional custody platform through Galaxy Digital, Chalom said. He said these developments show growing institutional use of Ethereum.
Chalom supports lower issuance and a sensible staking ratio. However, he favors Ethereum’s existing fee-burn mechanism. He said base-fee burning can make ETH deflationary when network activity reaches certain levels. Chalom therefore said EIP-8363 addresses issuance through the wrong mechanism.
