A proposal to gradually reduce Ethereum staking rewards, known as EIP-8363, has met strong resistance on concerns it could hurt DeFi, decentralisation and institutional investment demand. Cointelegraph reported on Aug. 7 that the proposal would lower rewards as staking grows and cut new protocol issuance to zero if 50 percent of total ether supply is staked.

Proponents including Justin Drake (저스틴 드레이크) of the Ethereum Foundation and Jerome de Tychey (제롬 드 티셰이), co-founder of the Ethereum Community Conference, see Ethereum as already having sufficient security. They argue additional staking delivers diminishing security benefits, while holders who do not stake are accepting dilution from higher issuance.

Ethereum currently has about 41.5 million ETH staked. The yield is 2.67 percent, and the share of total supply is 34.07 percent. Opponents counter that staking participation could already slow under market forces, and the problem is not big enough to warrant changing issuance policy.

Steve Berryman (스티브 베리먼), head of Ethereum client partnerships at Bitwise, expects staking could naturally approach a cap by the end of this year. He said if yields fall to around 2 percent, more ether is unlikely to be locked up in staking in large amounts.

Concerns have also been raised about the impact on DeFi. Because staking derivatives are widely used across collateral, lending and yield strategies, cutting rewards could have ripple effects across the ecosystem. Mike Silagadze (마이크 실라가제), founder of Ether.fi, said DeFi built on the staking ecosystem could take a major hit. Stani Kulechov (스타니 쿨레초프), founder of Aave, also pointed out that reduced staking rewards could shake the broader ecosystem.