EIP-8361, an Ethereum improvement proposal, would cut validator yield by 54 % from 2.6 % to approximately 1.2 % over an 18-month period. This reduction would reprice all DeFi products linked to staking yield, including liquid staking tokens like stETH, leveraged loops on Aave and Morpho, and Pendle’s fixed-yield markets. The unlevered spread between staking yield and WETH borrowing costs would shift from +1.1 percentage points to -0.3 percentage points, making five-times leveraged strategies loss-making on a daily basis. Aave founder Stani Kulechov and ether.fi CEO Mike Silagadze warned of potential institutional divestment, rotation into stablecoins, and erosion of confidence in Ethereum’s monetary policy. While lower issuance benefits passive ETH holders by reducing dilution, the reduced yield could push yield-seeking investors toward alternative income-generating assets.
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