Under the existing issuance curve, the yield paid in newly issued $ETH falls as more $ETH is staked but remains positive. The tapered issuance burn would deduct and destroy a growing share of validator rewards as staking increases, fully offsetting issuance rewards at a staked balance set to roughly half of $ETH’s supply. Its yield reduction would phase in over 18 months.
The authors still argue that very high staking participation threatens Ethereum’s security and neutrality and weakens $ETH’s role as money. The withdrawal changes the route they want to take, not those stated goals.
Opposition Moves the Debate Beyond Hegotá
The retreat follows the Ethereum Foundation Protocol cluster’s Sept. 7 assessment, which declined to back EIP-8363 for Hegotá while explicitly withholding judgment on its merits. The cluster said issuance policy needed a broader ecosystem process and that it intended to participate.
The Defiant previously reported opposition from Aave founder Stani Kulechov and ether.fi CEO Mike Silagadze, who argued that reward cuts could drive out solo stakers and favor large operators.
Lido contributors made a similar argument in an Aug. 14 forum statement. They said lower staking participation did not necessarily improve decentralization: higher-cost operators could exit while large custodians continued staking for business reasons beyond yield. The contributors, who said they were not speaking for Lido DAO, offered to help facilitate a broader process.
Hegotá’s official scope document lists FOCIL and Frame Transactions as scheduled for inclusion. EIP-8363 remains a draft proposal.
De Tychey’s proposed next steps begin with an issuance forum at Devcon in November to agree on objectives, metrics and the objections to address. A tentative January forum at a Columbia cryptoeconomics workshop would aim to converge on a feasible draft for the later I* upgrade—or document why no proposal could be agreed.
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