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Ethereum Staking Reward Cut Threatens DeFi Profitability

Guavy AI Editorial Team
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ETH AAVE
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A proposed Ethereum staking reward cut could have far-reaching consequences for DeFi's favorite loop.

The Ethereum Improvement Proposal (EIP) 8361 would reduce validators' yield from 2.6% to about 1.2%, a 54% reduction phased in over 18 months.

This burn mechanism, which disappears staked ETH from supply, threatens the profitability of products that rely on consensus issuance, including liquid staking tokens like stETH and lending markets such as Aave.

Aave founder Stani Kulechov warned that unpredictable or near-zero consensus yield could weaken institutional ETH demand, solo staking, ETH borrowing, and ETH-denominated DeFi.

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