A draft Ethereum Improvement Proposal seeks to reduce staking rewards to limit ETH concentration in large custodians and liquid staking providers.
A new Ethereum Improvement Proposal (EIP-8363) proposes reducing staking rewards to address concerns over the rising share of staked ETH, which surpassed 33% in April. Authors argue unchecked staking growth could concentrate ETH in large custodians and liquid staking providers, undermining its role as a neutral store of value.
Critics warn the proposal could disproportionately impact solo validators before larger institutions, weaken institutional demand for ETH, and disrupt DeFi markets reliant on staking yields. The draft was published just days before a deadline for proposals targeting Ethereum’s upcoming Hegotá upgrade, raising concerns about insufficient time for analysis.
Under the current model, staking yield never falls below 1.5%, even if all ETH is staked. Proponents argue this creates an unsustainable incentive structure, while opponents fear unintended consequences for network security and decentralization.