SharpLink CEO Joseph Chalom has formally opposed Ethereum Improvement Proposal 8363, a draft mechanism designed to burn consensus-layer staking rewards as the amount of staked ETH increases. Chalom said the proposal, also known as "Tapered Issuance Burn," would eventually eliminate newly issued ETH for validators once approximately 60.25 million ETH is staked—roughly half of Ethereum's current supply.
Chalom argued the change would damage Ethereum's economic appeal to institutions and raise capital costs throughout DeFi. He highlighted Ethereum's variable staking yield, currently around 2.75 percent, as a benchmark for on-chain interest rates.
Validator rewards currently depend heavily on issuance. Transaction priority fees and maximal extractable value account for only about 15 percent of total validator earnings. Under EIP-8363, validators would continue to receive transaction-related fees but would lose newly issued ETH.
Approximately $35 billion is locked in liquid staking products, which rely on validator rewards to generate returns. Chalom warned that reducing issuance to zero could make effective returns negative for some operators after accounting for infrastructure and operational costs.
That pressure would likely push collateral toward other yield-producing assets. Independent validators and smaller staking providers would face the sharpest impact, lacking the scale and alternative revenue streams available to larger entities.
Authors of EIP-8363 offer a different view. They argue Ethereum's current issuance curve encourages additional staking even when further deposits provide diminishing security benefits, and that the current curve maintains a yield of about 1.5 percent even if nearly all ETH is staked.
EIP-8363 remains a draft and has not been approved for inclusion in an Ethereum network upgrade. The proposal includes an estimated 18-month transition period to limit an immediate decline in validator returns.
Chalom also said native yield is a key factor attracting institutions to Ethereum over Bitcoin. Bitcoin provides price exposure and functions as a treasury reserve asset but does not generate protocol-native returns for holders.
SharpLink's corporate strategy reflects that distinction. The Nasdaq-listed company had staked nearly 900,000 ETH by April and accrued over 18,000 ETH in cumulative rewards.
Aave founder Stani Kulechov has also voiced opposition to EIP-8363, aligning with Chalom's concerns about the impact on staking rewards and the broader DeFi ecosystem.
