Key Highlights
- SharpLink opposes EIP-8363, arguing that reducing Ethereum’s staking incentives could weaken DeFi activity and make on-chain capital more expensive.
- The company warned that lower native yields could reduce institutional demand for ETH, while disproportionately affecting solo stakers and mid-sized staking operators.
- SharpLink said the proposal comes at the wrong time, as Ethereum is seeing growing institutional activity across stablecoins, tokenized assets, Layer-2 networks, and staking.
Sharplink, a digital asset financial firm, has stated its opposition to Ethereum Improvement Proposal 8363, describing the measure as the wrong proposal at the wrong time, and stated that Sharplink opposes it.
In an X post shared by Sharplink CEO Joseph Chalom, he identified four main grounds for its opposition. First, the firm argued that the change would undermine decentralized finance activity on Ethereum. It noted that staking yield, net of costs and inflation, functions as a base rate for onchain markets. Liquid staking tokens, with roughly $35 billion in total value locked, serve as collateral in lending protocols.
A reduction in yield, according to Sharplink, would raise the cost of on-chain capital, push real yields toward zero or negative after accounting for operating costs and liquidity costs and slashing risk, and lead to migration of collateral and thinning of lending markets. The company added that lower yields would disproportionately affect solo stakers and mid-sized operators.
What is the new EIP proposal
EIP-8363, titled “Tapered Issuance Burn,” is a draft Ethereum Improvement Proposal that would alter the network’s staking reward mechanism. It introduces a burn on a growing portion of validators’ consensus-layer rewards (for attestations, block proposals, and sync-committee duties).
The burn fraction rises with the staking ratio and reaches 100% once approximately 60.25 million ETH, about half the total supply, is staked. At that point, issuance yield falls to zero; validators would rely solely on transaction tips and MEV. The proposal remains a draft and has not been approved or scheduled for inclusion.
Other reasons for the opposition
Second, Sharplink stated that native yield is a reason institutions allocate to ETH rather than assets without comparable productivity. It said the proposal would remove that distinction at a time when institutional interest in Ethereum has increased through exchange-traded products, digital asset trusts, and private funds.
Third, the firm contended that issuance is an internal transfer that funds network security and development rather than a cost paid to external parties. Staking rewards, it said, support node operators, client software maintenance, and capital that is reinvested in the Ethereum ecosystem. Reducing issuance would eliminate that flow rather than redirect it and could prompt institutions to sell ETH upon unstaking.
Fourth, Sharplink pointed to recent institutional activity on Ethereum, including stablecoin and tokenized asset volumes, the construction of a layer-2 chain by Robinhood, tokenization of a money-market fund by BlackRock, and a staking partnership involving BNY and Galaxy Digital. The company argued that the timing of the proposal coincides with these developments.
Community divide on the new proposal
Other participants in the Ethereum community have also commented on related issuance proposals. Aave founder and CEO Stani Kulechov argued that capping rewards at zero once staking exceeds 50 percent of supply would make staking yields unpredictable and, in some cases, uneconomical, potentially weakening the network.
Replying to the current opposition from Sharplink, Kulechov says, “Sharplink opposed EIP-8363. Sharplink is one of the Ethereum ecosystem supporters and funders.”
Isidoros Passadis, chief of staking at Lido Finance, stated that a similar proposal attempts to address multiple objectives simultaneously, increasing the moneyness of ETH, addressing possible future security concerns from overstaking, and protecting solo stakers—and is likely to produce outcomes opposite to those intended.
In contrast, ARK Invest’s Director of Research Lorenzo Valente has pushed back against criticism of a related issuance proposal. He argued that the proposed change does not address Ethereum’s revenue challenges or the core issues raised by opponents. Valente stated that ETF issuers primarily focus on assets under management and overall take rates rather than seeking yield even if inflationary.
Sharplink’s statement concludes that the authors of EIP-8363 are serious researchers and supporters of Ethereum but that the proposal would reduce the network’s capacity to maintain current incentive structures for security and capital deployment.
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