# August 4th: Ethereum Tapered Issuance Burn Debate

> The great old issuance debate sparks up again. This time, with a proposed EIP from Ethereum researchers.

**Published by:** [ETH Daily News](https://ethdaily.io/)
**Published on:** 2026-08-05
**Categories:** news, 2026, august, 1002
**URL:** https://ethdaily.io/the-ethereum-tapered-issuance-burn-debate

## Content

Happy Tuesday. The total supply of ETH is not fixed. Ethereum is inflationary by default. The network issues new ETH to validators as a reward for securing the network. Before The Merge, Ethereum had a fixed block reward of 2 ETH per block. After The Merge, issuance dropped drastically and became variable based on the total supply of staked ETH. As more ETH is staked, the issuance reward decreases. There are many nuances to the issuance debate, but here's my understanding of today's proposal. Tapered Issuance Burn Proposal Ethereum researchers Justin Drake, Lion, and Ladislaus introduced the Tapered Issuance Burn, a new proposal seeking to reduce ETH issuance by burning a portion of each validator's reward at every epoch with issuance tapered linearly to zero once the staked ETH supply reaches 50%. Execution layer rewards from MEV and priority fees remain unchanged. Currently, staked ETH accounts for about 34% of the total ETH supply. The proposal authors fear that 55% of the ETH supply will be staked by 2028. Why is more staking bad? A core argument behind this proposal is that a higher staked ETH supply makes Ethereum less secure as centralized exchanges, institutions, and liquid staking protocols earn most of the issuance rewards. It argues Ethereum loses its neutrality to large staking entities and solo stakers get diluted. While made with good intentions, such a change can have bad outcomes. The Ethereum community pushed back on the issuance burn proposal. Most notably, DeFi founders Mike Silagadze of EtherFi and Stani Kulechov of Aave shared their concerns on the proposal. Among many opposing arguments, the change brings second order effects to the DeFi ecosystem and Ethereum in general. Since DeFi rates follow the ETH staking rate, a reduction will also reduce interest rates for ETH collateral. This means looping strategies using ETH as collateral will earn less yield and will likely need to unwind. Rather than increasing ETH demand, a low staking yield may push ETH stakers to withdraw in pursuit of higher risk-free yields elsewhere. Ryan Berckmans laid out some of the opposing arguments. The proposal was also published less than 48 hours before the Hegota EIP deadline, providing little time for community feedback before it is proposed for inclusion on August 6, 2026. In my opinion, I agree with Lefteris Karapetsas, issuance changes are not where researchers should be spending their time and energy right now. Someone else pointed out that the low single-digit dilution from issuance is insignificant if we expect ETH to appreciate a bit more than low single-digits. DeFi Saver Aave V3 to V4 Migrator DeFi Saver, a DeFi portfolio super app for managing positions across DeFi, released support for migrating Aave V3 positions into Aave V4. The migrator allows users to transfer their position without having to unwind their position. The release supports migrations to Main and Bluechip hubs on Aave V4. The feature leverages flash loans, which are loans that are repaid in the same block, to repay the loan, withdraw collateral, and reopen the same position on V4. Apart from the migrator tool, DeFi Saver also supports transferring wallets, swapping collateral, and looping positions. It's worth taking a look to see if you can save on your loan by switching debt type or lending market. Misc News As a reminder, Devcon8 speaker applications close this Thursday, August 6th. Will Papper introduced Cloudflare Wallets: programmable stablecoin wallets with spending limits for AI agents to pay for things. Loring releases EIP campaigns tool on testnet, enabling users to commit ETH to back an EIP. Ondo perps support Arbitrum USDC collateral. And Aztec Network introduces an onchain strategy game called Dark Forest. Disclaimer: Content is for informational and educational purposes only and does not constitute financial, investment, legal, or other professional advice. No representations or warranties are made as to accuracy, completeness, or timeliness. Use of this content is at your own risk, and you should consult a qualified professional before making decisions. No fiduciary or advisory relationship is created.

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