Lots of controversy on this EIP today.
The issue is this change may not effectively lead to the intended objectives (at least the community's not convinced), while the second-order effects are not addressed or discussed sufficiently.
Some concerns which i see are emerging in community discussions:
- Would lower staking rewards push solo stakers out first, while large institutional operators remain viable through MEV revenue, execution-layer income and economies of scale, potentially increasing validator concentration?
- How would lower issuance affect the yields and DeFi pricing of LSTs such as stETH and weETH, including their use in lending, yield products and restaking markets?
- Is there sufficient empirical justification for the proposed 50% staking threshold and the linear burn curve, particularly as ETH ETFs, institutional staking and onchain credit markets continue to develop?
I personally don't think this will effectively protect solo stakers, nor will it really reduce inflation that much. Ethereum has developed into a complex economy, and the potential second order effects may far outweigh the realistic achievement of intended objectives.
🚨 New EIP: Tapered Issuance Burn
We just submitted an EIP to ethereum/EIPs: a minimal, market-driven fix to Ethereum's issuance policy removing the incentive for stake growth beyond 50% of ETH supply.
EIP-8361 by @pintail_xyz, @jdetychey, @dapplion, @pa7x1, @ladislaus0x & @drakefjustin 🧵