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Stani Kulechov, the founder of Aave, has come out swinging against one of Ethereum’s newest and most contentious proposals. EIP-8361, dubbed the “Tapered Issuance Burn,” landed on August 4 and immediately drew fire from corners of the ecosystem that rely on predictable staking economics to function.
Kulechov’s argument is straightforward: changing the rules on validator rewards introduces the kind of unpredictability that makes institutional money nervous and could undermine the borrowing strategies that power platforms like Aave.
What EIP-8361 actually proposes
The proposal, crafted by Ethereum Foundation researchers Jérôme de Tychey and Justin Drake, introduces a mechanism that would gradually burn an increasing share of consensus layer validator rewards as Ethereum’s staking ratio climbs. The endgame is aggressive: 100% burn, meaning zero net issuance from staking, once total staked ETH reaches roughly 50% of total supply, or approximately 60.25 million ETH.
Right now, Ethereum’s staking ratio sits at about 34.4%, which translates to around 41.6 million ETH locked up by validators. That number has been steadily climbing. Projections suggest it could blow past 55% by early 2028 if current incentive structures stay in place.
Transaction fees and MEV, the other two revenue streams for validators, would remain untouched. The burn applies exclusively to the base issuance rewards that validators receive for proposing and attesting to blocks.
The transition period would span roughly 18 months, giving the ecosystem time to adjust.
Why DeFi leaders are pushing back
Kulechov’s critique cuts to the heart of how modern DeFi actually works. Platforms like Aave allow users to borrow ETH, and the interest rates on those loans are calibrated against the yields available from staking. If staking yields get progressively burned away, the economics of ETH borrowing shift dramatically.
Kulechov argued that the proposal could deter institutional interest in Ethereum. The proposal has drawn widespread criticism since its introduction.
The bigger picture for Ethereum and ETH holders
Core developers are scheduled to discuss EIP-8361 on August 7, just ahead of the planned Hegotá upgrade. Without broader consensus, the proposal’s inclusion in that upgrade remains unlikely.
The debate exposes a genuine philosophical divide within Ethereum. On one side: researchers who believe unchecked staking growth threatens the network’s decentralization and long-term health. On the other: builders and capital allocators who see staking yield as a foundational primitive that shouldn’t be subject to periodic redesign.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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