SharpLink CEO Criticizes Ethereum’s EIP-8363 Proposal as Harmful to DeFi

Joseph Chalom, chief executive officer of SharpLink, has formally opposed a new Ethereum improvement proposal, EIP-8363, that would gradually burn validator rewards to curb staking on the network.

In a post on X on Aug. 7, Chalom wrote that the proposal would damage the decentralized finance, or DeFi, ecosystem and erase one of Ethereum’s core advantages over Bitcoin. He added that it would undercut momentum at a critical time, as institutional capital begins flowing into the asset.

EIP-8363 was proposed by Ethereum Foundation researcher Justin Drake and others. The proposal would progressively increase the share of consensus-layer rewards that is burned as Ethereum’s staking ratio rises. Its central mechanism would reduce the reward rate to zero if about 50% of the total Ethereum supply is staked. The stated aim is to limit staking through market forces and prevent the dilution of asset value for users who do not stake.

Chalom disputed that rationale, arguing that Ethereum’s staking yield serves as a benchmark interest rate for the on-chain market. Reducing that yield would raise the cost of capital and push real returns toward zero, he wrote. That would ultimately drive collateral and network activity elsewhere.

Network issuance is not a cost Ethereum pays to outsiders, Chalom said, but an internal transfer within the system to those who secure and build the network. He added that Ethereum remains attractive to institutions because it is inherently a productive asset.