SharpLink chief executive Joseph Chalom publicly opposed a draft Ethereum proposal on August 7 that would progressively burn validator rewards as more ETH is staked, warning it would remove the base rate underpinning decentralised finance and erode the case for institutional ETH holdings.
The proposal, titled “Tapered Issuance Burn,” was introduced on August 4 by Ethereum researchers including Justin Drake and Jérôme de Tychey. It would burn a growing share of the consensus-layer rewards validators earn for attestations, block proposals and sync-committee duties, with the burn rate scaling to 100% once staked ETH reaches roughly 60.25 million, about half the current supply. The change would phase in over approximately 18 months.
“Sharplink opposes it,” Chalom wrote in an article published on X. He described validators at that threshold as “living on transaction tips alone that today account for only 15% of staking yields.”
The pull request remained open as of August 7, and the proposal sits at the discussion stage on Ethereum Magicians. No mechanism has been activated.
A note on naming: Chalom referred to the proposal as EIP-8363, and most coverage has followed. Crypto.news has reported that the mechanism he described matches EIP-8361, a closely related draft. The two are being discussed largely interchangeably, though they are distinct filings.
Chalom’s objections
Chalom, a former BlackRock executive, set out four arguments.
His central claim is economic. Staking yield net of costs and inflation functions as “the de facto base rate” beneath DeFi, he argued, and reducing it would raise the cost of on-chain capital, push real yields toward zero or negative after operating costs and slashing risk, and thin lending markets as collateral migrates elsewhere.
Second, he framed native yield as the distinction that makes ETH “natively productive” relative to bitcoin, which offers price exposure and treasury utility but no protocol-native return. Removing it, he said, “could lead to institutions selling ETH as they unstake it.”
Third, he said staking rewards fund validators, infrastructure and developers across the ecosystem, characterising issuance as a transfer of value to participants securing the network rather than a cost paid to an outside party.
Fourth, he objected to the timing, arguing Ethereum already has a scarcity mechanism in the base fee burn that makes ETH deflationary when network usage passes a threshold. He called EIP-8363 “an economic and business challenge, not a technical one.”
SharpLink’s position is directly affected. The Nasdaq-listed company had staked nearly 900,000 ETH and earned more than 18,000 ETH in cumulative rewards by April, with holdings staked through Coinbase, Anchorage, Figment and Galaxy Digital, and backing protocols including ether.fi, Linea and EigenCloud. In May it committed $100 million to a $125 million on-chain yield fund managed by Galaxy Digital.
Analysts doubt it passes
Messari described the proposal as a solution in search of a problem, noting Ethereum’s annual issuance already sits at roughly 0.85%.
“EIP-8363 seeks to address valid concerns regarding stake centralization,” its analysts wrote. “However, the impact addresses nominal yield, when real yield from the demand side remains the core problem ETH faces.” The firm rates the odds of passage as low.
The precedent is unfavourable. The related EIP-8361, which would cut consensus-layer yield from about 2.6% to 1.2% at current staking levels, never reached a vote and drew 99.77% validator opposition.
Chalom conceded the odds are long while arguing the implications are not.
The argument on the other side
Supporters contend the burn would curb dilution and resist staking centralisation among large institutions, addressing a concern that has grown as corporate treasuries and ETFs accumulate ETH.
The solo staker question cuts both ways and is genuinely unresolved. Large operators spread infrastructure costs across substantial pools, so declining rewards may still leave staking viable for them while pushing smaller operators out, which critics say would accelerate consolidation. Supporters argue the design does the opposite by making additional staking progressively less attractive as an operator’s share of the network grows.
Reaction across the ecosystem has been mixed. Aave founder Stani Kulechov endorsed Chalom’s reasoning, posting “Save ETH staking.” Isidoros Passadis, head of staking at Lido Finance, said a similar proposal attempts to achieve too many objectives simultaneously and is likely to produce outcomes opposite to those intended. ARK Invest research director Lorenzo Valente has pushed back against criticism of a related issuance proposal.
Why a treasury holder is arguing about protocol design
The episode fits a pattern that has emerged over the past month. Corporate holders with concentrated exposure to a single asset are intervening directly in protocol governance debates that were historically conducted among developers and node operators.
Michael Saylor published a 110-point essay opposing BIP-110 in July, arguing Bitcoin should not change consensus rules to police transaction content. Chalom is doing something structurally similar on Ethereum, though the stakes are more directly financial: SharpLink’s business model depends on the yield the proposal would eliminate.
That creates an obvious tension. Chalom’s technical arguments about DeFi base rates and validator economics may be sound, and other participants including Aave and Lido have echoed parts of them. But he is also the chief executive of a company whose treasury strategy would be materially damaged if the proposal passed, and readers weighing his position should hold both facts at once.
The timing sharpens it further. Grayscale amended its Ethereum Staking Mini ETF trust agreement on August 6 to stake nearly all of its 839,556 ETH by default, and Ethereum ETFs have been drawing consistent inflows while bitcoin products thin. The institutional staking pipeline is arriving precisely as a proposal to eliminate staking issuance reaches the discussion stage.
ETH traded near $1,871 on Monday. The proposal has no vote scheduled.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making any investment decisions.
