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ETH Aave founder warns: Ethereum circulation linked to pledge ratio will be reduced or intensified centralized
Stani Kulechov, founder of Aave decentralized lending agreement, has publicly opposed a recently proposed Ethereum Improvement Proposal (EIP) that aims to reduce Ethereum circulation based on the ETH pledge ratio. In a post on the Ethereum Mage Forum, Kulechov argued that the measure could inadvertently strengthen the institution-driven pledge structure, which runs counter to the proposal's goal of addressing centralization issues.
Kulechov's argument for the centralization problem
Kulechov's criticism focuses on the behavior of different validator types when yields fall. He pointed out that as pledge rewards decrease, individual verifiers-who often face higher operating costs and lower financial flexibility-are more likely to exit the network. In contrast, institutional participants, such as ETF issuers and exchanges, may continue to pledge for business reasons even if profits are slim.
Kulechov believes that this dynamic does not solve the centralization problem. If institutions still insist on pledging despite low returns, a reduction in issuance will only concentrate more control in their hands. Conversely, if the verifier requires a high enough return to justify the risk, the number of active pledgers will naturally stabilize, making intervention unnecessary. In either case, the proposal will not achieve its intended goals.
Broader impact on the Ethereum pledge ecosystem
The debate comes at a time when the Ethereum pledge ecosystem is already under close scrutiny. Since a large number of ETH are locked in pledge contracts, the network is facing doubts about decentralization and the influence of large pledge pools. Kulechov's comments highlighted the growing tension between protocol level changes and the actual behavior of a diverse group of verifiers.
He suggested reviewing the proposal's impact on individual verifiers and tax issues before moving forward, indicating the need for a more comprehensive analysis. He also called for safeguards to ensure minimum yields to protect small players from being squeezed out by institutional players.
Why this matters
This discussion is not just about the technical level. The results of such proposals could affect the security and decentralization of Ethereum, which supports the vast DeFi ecosystem. If pledges are dominated by a few large entities, it may weaken the resilience and credibility of the network. Kulechov's intervention represents an important voice in the ongoing debate over how to balance efficiency, security and decentralization of proof-of-stake networks.
Conclusion
Kulechov's opposition to the EIP highlights the complexity involved in adjusting Ethereum monetary policy. While the proposal aims to reduce circulation and address centralization issues, its unintended consequences may instead deepen the problems it is trying to solve. As the community reviews, careful consideration of verifier incentives and online health is crucial.
Frequently Asked Questions
Question: What is the content of the proposal?
Answer: The proposal proposes to correspondingly reduce the circulation of Ethereum based on the ETH pledge ratio, which means that as more ETH is pledged, the reward rate will decrease.
Question: Why does Kulechov oppose it?
Answer: He believes this may lead to the withdrawal of individual validators while institutional pledgers still exist, thus deepening rather than solving the centralization problem.
Question: What alternative advice does Kulechov have?
Answer: He suggested first reviewing the impact on individual verifiers and tax issues, and implementing safeguard measures to ensure that small pledgers receive the lowest rate of return.
