Ethereum Yield Cut Proposal Triggers 6.3% ETHFI Plunge

Ethereum's proposal to reduce ETH staking rewards has sent ETHFI plummeting by 6.3% over the last 24 hours.

The primary catalyst for this decline is EIP-8361, a new Ethereum improvement proposal that aims to lower ETH's staking yield from around 2.6% to about 1.2% at current staking levels, and potentially to 0% after 50% of ETH is staked.

A DeFi analyst noted that both $LDO and $ETHFI dumped following the proposal to cut $ETH staking rewards, specifically linking the drop to EIP-8361. This has led to a repricing by the market, given that ether.fi's core product is a liquid restaking protocol on Ethereum.

The market continues to value ETHFI almost purely as a restaking or staking yield play, despite efforts by the business to diversify. One holder observed that every negative headline around the Ethereum Foundation proposal immediately sends $ETHFI lower, questioning whether the market is still valuing ether.fi as 'nothing more than a restaking protocol'.