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Ethereum Staking Rewards Proposal Sparks DeFi Backlash

Guavy AI Editorial Team
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ETH AAVE
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The Ethereum community is divided over a proposal to remove staking rewards if staked ETH surpasses half of its overall circulating supply. The proposal, known as EIP-8361, aims to make ETH deflationary and increase its value by reducing issuance.

However, DeFi leaders have opposed the plan, citing concerns that it would derail institutional adoption and affect solo stakers with unpredictable yields. Stani Kulechov, CEO of Aave, said the proposal would hurt DeFi borrowing strategies and make ETH less viable as an asset.

Mike Sligadze, CEO of EtherFi, echoed similar concerns, questioning how a negligible inflation cut would boost ETH value at the expense of the DeFi ecosystem. He warned that seven of the top 10 DeFi protocols could face a capital exodus due to the proposal.

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