Aave founder warns 0% ETH staking reward cap could hurt Ethereum

A proposal in the Ethereum community to cap staking rewards at 0% if half of ETH’s total supply is staked could backfire on the ecosystem, Aave founder Stani Kulechov said. He said the proposal could end up hurting the Ethereum ecosystem rather than delivering its intended effect. Under the proposal, staking rewards would be capped at 0% if more than 50% of the total ETH supply is staked. Kulechov said that would make staking yields harder to predict, which could push institutional investors that value stable cash flow toward other blockchain networks instead of ETH. He added the DeFi ecosystem would also face significant effects, as most strategies using ETH as loan collateral would lose profitability if staking rewards fall to 0%, while ETH-based lending and interest income models would also shrink sharply. In his view, the proposal could reduce Ethereum’s appeal as an investment and limit its growth potential.