Ethereum researchers propose setting pledge limits, critics warn of serious consequences

Ethereum token economics debate resurfaces: New proposal to adjust verifier rewards based on pledge volume

Six researchers and developers (including researcher Justin Drake) at the Ethereum Foundation have jointly released a draft proposing to adjust the amount of ETH issued to verifiers based on changes in online pledge participation. This draft is temporarily labeled as EIP-8363 and is called the "Decreasing Issue Destruction Mechanism". Its core mechanism is that when the amount of ETH pledged approaches a preset threshold, part of the verifier consensus reward will be gradually destroyed. The policy is planned to be implemented in phases over approximately 18 months, which supporters believe will help resolve dilution pressures caused by continued high pledge incentives.

Key Points

The proposed EIP-8363 stipulates that when the pledged ETH approaches 60.25 million (approximately 50% of the current ETH supply), the destruction rate of verifier consensus rewards will be gradually increased. According to the draft, annual issuance is expected to peak (approximately 0.5% of ETH supply) when about 20% of ETH is pledged, and then approach zero as the threshold approaches. Critics, including DeFi and independent pledge advocates, have warned that the regressive reward mechanism could lead to independent verifiers being squeezed out earlier than large pledge entities. The proposal also raises concerns about whether the community will have enough time to review, especially as the August 6 deadline for EIP pull requests related to the Hegotá upgrade approaches. EIP-8363 is still in an early draft and has not yet been approved, scheduled or included in the Hegotá upgrade.

How EIP-8363 changes issuance with the growth of pledge volume

The "Decreasing Issue Destruction" proposal sets a clear mechanism: as the pledge ratio increases towards a fixed target value, verifiers will see a larger share of their consensus rewards transferred to destruction. The author set a threshold of 60.25 million ETH pieces (approximately equal to 50% of the current ETH supply), and the destruction proportion will reach 100%. In other words, the more ETH that is pledged, the greater the net circulation will be reduced by the system through destruction. The draft stipulates that the change will be implemented gradually over about 18 months rather than suddenly switching. The EIP has been released as a draft on GitHub under the temporary identifier EIP-8363.

Why does the author think "dilution" is the real problem?

The argument in support of the proposal is that as pledges become increasingly dominant, Ethereum should restrict circulation more strictly. One of the authors, Jérôme de Tiché, pointed out that the current incentive curve of the network will not "close" and that even if all or most of the ETH is pledged, dilution pressure will continue to be generated. De Tiché mentioned that the pledge ratio reached 33% in April and warned that continued growth could lead to the increasing concentration of ETH in the hands of large custodians and liquidity pledge providers, thereby weakening the role of raw, neutral ETH and increasing intermediated claims in turn. In an article related to the proposal, Detichet described the issuance issue as a "dilution tax", arguing that when pledged derivatives and large intermediaries expand, the core position of assets most directly related to the accumulation of Ethereum's core value in daily use will decline. He also argued that uncontrolled circulation would make it difficult for Ethereum to maintain its fundamentals as a "store of value." According to supporters of the proposal, the mechanism could help make supply growth limited and more predictable and link it to Ethereum's broader monetary system. They believe that combining supply-side mechanisms such as EIP-1559 and destruction models introduced for specific network activities, decreasing validator circulation will reduce long-term inflationary pressures. Outside the Ethereum Foundation developer circle, Gray Research has previously pointed out that limiting pledge incentives may be "beneficial to ETH prices in the long run."

Opposition: Independent Verifiers, DeFi Mobility and Institutions

Despite receiving partial support, the draft still faces opposition from developers, pledgers and DeFi participants. The core concern is the impact of reduced rewards on small participants-especially independent validators-who may face relatively higher operating costs. Aave founder Stani Kurechev criticized the proposal for weakening institutional demand for ETH and reducing lending activity in the DeFi space, which he believed was "harmful" rather than beneficial to Ethereum goals. Ether.Fi CEO Mike Silagazze echoed the concerns of independent pledgers, saying the policy would effectively "crowd out" independent operators unless they receive external subsidies. In his view, the result will be a collection of validators dominated by large centralized entities, while users passively hold ETH. Detichet refuted this claim at the Ethereum Magician Forum, pointing out that users of large pledge providers still typically have to pay fees, so as consensus rewards decline, so will their appeal. He acknowledged that research on the size and timing of these effects remains controversial, but core differences reflect a broader contradiction: whether reducing verifier incentives mainly undermines decentralization dynamics or mainly corrects dilution issues without substantial damage to the pledge ecosystem. Some developers have also questioned the process and timing. While the confusion appears to be related to the deadline for Hegotá upgrades, Greg Kumuzos believes the community may not have enough time to thoroughly review such a significant monetary policy change.

Location of EIP-8363 in the Ethereum Hegotá roadmap

EIP-8363 has not yet been approved, scheduled, or included in the Hegotá upgrade. The draft is associated with an August 6 deadline, but relevant reports clarified that the date involved a solicitation request for an additional EIP for Hegotá, rather than a deadline for deciding which proposals will ultimately be included. Ethereum community organizer Trent Van Epps said the proposal selection process for Hegotá could last until November 8, noting that the upgrade is expected to hit the main network in the second quarter of 2027. This timeline is important because changes in issuance volume and verifier incentives are not only operational parameters, they also interact with token supply expectations, pledge behavior, and DeFi's strategic economics that rely on pledge returns. Since EIP-8363 is still in the draft stage and has not been confirmed for inclusion, the follow-up needs to be determined through community discussion and final selection process. For readers following this debate, the next critical juncture is how EIP-8363 evolves during the public review process, whether there is further modeling to clarify its expected impact on independent verifiers and large pledge providers, and how, if any, the proposal fits into the Hegotá EIP selection window, which ultimately ends on November 8.