SharpLink CEO Joseph Chalom has stated that Ethereum Improvement Proposal EIP—8363 will strip Ethereum of its main competitive edge over Bitcoin — the ability to generate income simply by holding it. The document limits the share of coins in staking through the burning of validator rewards.
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— Joseph Chalom (@joechalom) August 7, 2026
“We will voluntarily undermine one of Ethereum’s competitive advantages at a time when it is outpacing Bitcoin and other major cryptocurrencies,” he wrote.
According to Chalom, the profit from locking funds acts as a base rate for all on-chain markets: credit rates in protocols and any investment decisions are evaluated relative to this metric. Liquid staking tokens also rely on this rate.
Reducing rewards will increase the cost of capital, bring real returns to zero, and push collateral and activity to other networks, emphasized the SharpLink CEO.
Chalom also opposed the interpretation of issuance as a network’s cost for its own security:
“Issuance is not a cost that Ethereum pays to outsiders. It is a redistribution within the system, from the network to those who protect and build on it.”
However, he refrained from criticizing the proposal’s developers, describing their work as conscientious.
Decision Postponed Until Fall
EIP-8363 introduces phased burning of validator consensus rewards: the higher the share of ETH in staking, the greater the deduction. With 60.25 million staked coins — about half of the total supply — the reduction rate will reach 100%. The transition period is set for 18 months.
Developers published a draft of the initiative on August 4 — two days before the deadline for additional comments on the Hegota update. The tight timeline has been a major point of criticism. However, the selection of proposals will continue until the end of October, and the update itself is expected no earlier than 2027.
Currently, about 41.6 million ETH (34% of the supply) is staked with an annual yield of 2.65%; nearly 2.5 million ETH are in the queue. The authors calculated that an immediate implementation of the mechanism would drop the consensus yield from 2.6% to 1.2%, hence the gradual introduction of burning.
In June, the Validator Redirected Revenue initiative emerged on the Ethereum Research forum, proposing to allow up to 10% of staking rewards to be redirected to ecosystem funding through a hard fork.
