The EIP-8361 Firestorm: Why DeFi Leaders United Against Ethereum's Staking Reward Proposal

The Scale of Opposition

The proposal was met with what Aave founder Stani Kulechov described as "almost unanimous disapproval" from the Ethereum community, potentially becoming one of the most contested EIPs in Ethereum's history—second only to ProgPoW . ether.fi CEO Mike Silagadze went further, claiming "every builder on Ethereum opposes this" . Over two days, critics posted extensively on X and the Ethereum Magicians forum, with major DeFi founders, validators, and solo stakers lining up against the draft .

Stani Kulechov (Aave / Avara Founder): Systemic DeFi Risk

Kulechov was among the first and most vocal critics. He stated bluntly that the proposal "doesn't achieve the outcome it tries to achieve and is actually harmful" for Ethereum . His core arguments centered on several interconnected risks:

Killing the Leveraged Staking Loop

Kulechov warned the proposal would kill ETH borrowing demand on Aave and other lending markets by making the leveraged staking loop—borrow ETH, stake it, earn yield, repeat—uneconomical . This loop represents one of DeFi's largest recurring sources of demand for ETH borrowing. If net yields drop from ~2.6% toward 1.2% then zero, the cost of borrowing WETH could exceed the staking return, flipping what was a source of income into a daily loss for loopers .

Unpredictable Yields Deter Institutions

Making staking yields variable and unpredictable above 50% supply would deter institutional investors who need predictable returns to allocate capital . Kulechov argued this unpredictability could push institutions off Ethereum to other chains .

Undermining ETH's Asset Appeal

The proposal, he argued, "quietly weakens demand for ETH itself" and strips away ETH's key competitive advantage over Bitcoin—native yield . His summary was direct: "Ethereum should not be punished for growth" . He warned the change could make ETH less viable as an asset, restricting its potential, and push users toward stablecoins or rival chains .

Systemic Risk, Poorly Modeled

Kulechov also highlighted that the second-order chain effects of the proposal had not been adequately modeled, and the zero-yield mechanism could inadvertently exacerbate staking centralization—the opposite of what supporters claimed it would achieve . He warned the proposal could face "historic opposition from validators and the community" in the All Core Developers process .

Mike Silagadze (ether.fi CEO): Process, Centralization, and Control

Silagadze was furious, posting a lengthy critique describing the proposal as "disappointing on every level" .

Rushed Process

The EIP was released with only 48 hours' notice for public comments, despite being a major network economics change with "far-reaching implications for all of DeFi" that would realistically go live in approximately four months . This was a recurring complaint—co-authors of other EIPs noted the community wasn't given enough time to review such a significant monetary policy change .

Centralizes Staking

Silagadze argued the proposal would "self evidently push out solo stakers who aren't subsidized by the EF or others" and "essentially guarantee that the only ones staking are large centralized entities with zero cost of capital where users passively hold their ETH" . This would, in his view, harm the DeFi ecosystem and centralize control among a few large operators .

No Builder Support

He stated bluntly that "none of the reasoning makes any damn sense" and reiterated that "every builder on Ethereum opposes this" . He warned that liquid staking tokens (LSTs) like Lido's stETH and Rocket Pool's rETH would see their base yields compressed, destabilizing the entire staking-linked DeFi ecosystem .

Joseph Chalom (SharpLink CEO): The Wrong Proposal at the Wrong Time

Joseph Chalom, CEO of the Nasdaq-listed Ethereum treasury company SharpLink, published a detailed opposition article on X arguing the proposal was "the wrong proposal, at exactly the wrong time" .

Destroys ETH's Only Advantage Over Bitcoin

Chalom's central argument was that ETH's yield productivity—the ability to earn income simply by holding—is its main differentiator from Bitcoin. Zeroing issuance would eliminate this advantage, voluntarily undermining one of Ethereum's key competitive advantages at a moment when it is outperforming Bitcoin and other major cryptocurrencies .

$35 Billion in LST Collateral at Risk

The proposal would strip the base yield out from under roughly $35 billion in liquid staking token (LST) collateral, destabilizing the entire LST and DeFi lending ecosystem that is built on staking yields . The base rate that all on-chain markets reference—from lending to borrowing—would be removed, raising the cost of capital across DeFi .

Capital Flight Off-Chain

Lower rewards would push institutions to sell ETH as they unstake, moving capital off the Ethereum chain entirely . Validators would be forced to rely almost entirely on transaction fees and tips, which currently account for only about 15% of revenue . This would make solo staking uneconomical and could force smaller and medium-sized staking operators out of the market .

Terrible Timing

Chalom argued the timing was especially damaging because Ethereum is experiencing massive institutional adoption: Robinhood is building a new chain on Ethereum Layer 2, BlackRock is tokenizing money market fund shares on-chain, and BNY Mellon is introducing staking services through a partnership with Galaxy Digital . He called for using the existing base fee burn mechanism—already destroying ETH through EIP-1559—as the primary means of making ETH scarcer over time, rather than making fundamental changes to protocol economics at this stage .

Status Relative to the Hegota Network Upgrade

As of the most recent reporting (August 6–8, 2026), EIP-8361/EIP-8363 remained a draft proposal still under debate . Core developers had not yet made a final inclusion decision. Multiple outlets reported that the proposal was under consideration "days before core developers decide whether the idea belongs in the next network upgrade"—widely believed to be the Hegota upgrade . The deadline for EIPs targeting Hegota was August 6, adding urgency to the debate .

Chalom himself described the proposal's odds of passing as "long" , and Kulechov warned it would face historic opposition from validators and the community through the formal All Core Developers governance process .

Bottom line: The draft had not been confirmed for Hegota as of August 8, 2026. It faced such intense, near-unanimous opposition from DeFi's most prominent builders, LST protocol founders, and validator constituencies that its path to inclusion appeared extremely uncertain.