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Why Ethereum MUST Change Its Monetary Policy | Sam Jernigan and Jerome de Tychey

August 20, 2026

AI Summary

5 min read

Ethereum’s staking yield is not a free lunch—it is a tax on every holder who does not stake, and the current incentive structure is pushing the network toward a dangerous concentration of power. On this episode of Bankless, core EIP author Jerome de Tychey and macro investor Sam Jernigan make the case for EIP-8363, a proposal to cap Ethereum’s issuance at 0.5% of supply and let the market find a natural equilibrium for the staking ratio. The alternative, they argue, is a slow-motion capture of the consensus mechanism that undermines Ethereum’s most valuable property: credible neutrality.

The problem: an issuance curve with no off switch

The current reward curve incentivizes staking at every level, even as the staking ratio approaches 100%. There is no equilibrium built into the system. As more ETH is staked, non-stakers are diluted, which in turn pressures them to stake just to preserve their relative position. At the current rate, Jerome warns, more than 50% of ETH supply could be staked by 2028. That is not just an economic inefficiency—it is a security risk.

"The more ETH at stake, the more everyone else gets diluted, the more people feel forced to stake just to keep up," Jerome explains. "Raw ETH gets displaced by staking tokens and wrappers, and staking replaces the working money in the whole system."

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What you'll learn

  • 1 (00:02) **Episode Introduction** - Host introduces guests: Jerome de Tychey, founder of the ETCC conference and co-author of EIP 8363 (stake targeting EIP), and Sam Jernigan, CIO of Lafayette Macro and prominent stake targeting proponent.
  • 2 (01:07) **The Problem: Why Change ETH Issuance Is Urgent** - Jerome de Tychey explains the core issue being addressed.
  • 3 (04:50) **The "So What?" Question: Why High Staking Is Catastrophic** - Sam Jernigan argues that high staking ratios threaten Ethereum's credible neutrality.
  • 4 (11:13) **The Window of Opportunity Is Closing** - Jerome emphasizes that fixing issuance gets harder as staking ratio climbs.
  • 5 (13:16) **Ethereum's Original Design Intent** - Sam notes that staking was always meant to be capped, with Vitalik originally suggesting as low as 15%.
  • 6 (18:24) **The DeFi vs. Self-Sovereignty Polarity** - Host frames the tension between Ethereum's radical self-sovereignty and the DeFi market economy built on staking yield.
  • 7 (21:34) **Sam and Jerome Respond: The Subsidy Is a Distortion** - They argue the current issuance is a harmful subsidy, not a market outcome.

+ Full timestamped outline available in the app

Show Notes

Ethereum may be paying too much to secure itself, and the consequences could extend far beyond a little extra ETH issuance. Jerome de Tychey, co-author of EIP-8363, and Sam Jernigan join David Hoffman to make the case for stake targeting, a proposal designed to stop Ethereum’s staking ratio from climbing indefinitely. They debate what happens if more than half of ETH becomes staked, whether today’s issuance threatens credible neutrality, why staking may be crowding out DeFi, what lower rewards could mean for ETH’s monetary premium, and whether solo stakers and institutional holders ultimately win or lose from the change. Subscribe for more conversations on Ethereum’s monetary policy and future.

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TIMESTAMPS

0:00 Why Ethereum Needs Stake Targeting
4:27 What Actually Breaks With More ETH Staked?
9:54 The 50% Social Backstop
18:24 Ethereum’s Protocol vs. Its DeFi Economy
21:30 Is Staking Crowding Out DeFi?
26:19 Dilution, Subsidies, and ETH Price
35:46 Would Lower Rewards Hurt or Help DeFi?
49:48 What About Tom Lee and Institutional ETH Holders?
57:02 Does This Hurt Solo Stakers?
1:09:01 Why EIP-8363 Is So Contentious
1:18:10 The Final Case for Changing Issuance

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RESOURCES

Jerome de Tychey
https://x.com/jdetychey

Sam Jernigan
https://x.com/macrosam

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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures

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