SharpLink CEO warns EIP-8363 could kill ETH’s biggest advantage over Bitcoin

Sharplink CEO Joseph Chalom has come out against EIP-8363, the controversial Ethereum Improvement Proposal that is looking to cap the amount of ETH staked by instituting a progressive burn of validator rewards. 

The proposal, formally titled "Tapered Issuance Burn," would gradually increase the portion of consensus-layer rewards that are burned as the staking ratio rises, reaching a full 100% burn — and thus zero issuance yield — once roughly 50% of the ETH supply is staked.

Introduced earlier this week, EIP-8363 has generated a significant amount of backlash and support, with critics noting that it could disproportionately hurt solo stakers and weaken Ethereum’s security. 

Authors of the draft proposal include Ethereum Foundation researcher Justin Drake and EthCC founder Jérôme de Tychey, among others, who argue the change could act as a market-driven way to limit the amount of staked ETH while reducing dilution for non-stakers. 

"The authors are serious researchers and deep believers in Ethereum. We know many of them well, we like them, and none of this is personal. But well-intentioned people can be wrong, and on this they are," Chalom, former head of digital asset strategy at BlackRock, wrote.

If passed, the reduction would be phased in over about 18 months. 

Ethereum's institutional edge

For his part, Chalom argued that staking yield currently functions as the de facto base rate for onchain markets, supporting liquid staking tokens, lending protocols, and capital deployment. Cutting it, he said, would raise the cost of capital, push real yields toward zero and drive collateral and activity elsewhere. 

He also took aim at the idea that Ethereum overpays for security. "Issuance is not a cost Ethereum pays out to strangers. It is a transfer inside the system, from the network to the people who secure and build it," Chalom said. 

As part of his argument, Chalom said Ethereum’s issuance is attractive to institutions because ETH is "natively productive." 

"We would be voluntarily undermining one of ETH’s competitive advantages at a moment when it is outperforming Bitcoin and other major crypto assets," he said.

In recent months, Ethereum’s leadership has been doubling down on attracting institutional users, particularly with the launch of the Ethereum Institutional non-profit and the launch of EthSystems, a for-profit firm spun out of the Ethereum Foundation focused on building corporate privacy tools. 

SharpLink, which holds and deploys significant ETH across validators and DeFi protocols, also formally opposes the proposal. SharpLink is the second-largest publicly traded Ethereum treasury firm, launched with backing from Consensys and Ethereum co-founder Joe Lubin, who has not commented publicly on the proposal. 

Chalom is not alone in opposing the EIP. Aave founder Stani Kulechov called the proposal "hurtful for Ethereum," warning it would make yields unpredictable and weaken demand for ETH as a productive asset. 

Others have also criticized the timeline for EIP-8363’s introduction, having been submitted just two days before a deadline for inclusion as a non-headlining part of the upcoming Hegota hardfork. Hegota will activate months after Glamsterdam, expected in the second half of the year. 

Currently, FOCIL is scheduled as the headliner for Hegotá. EIP-8363 is just up for consideration and can still be declined.