EIP-8363 PROPOSAL: A 58.6 PER CENT REDUCTION IN THE TAIFENG PLEDGE

THE EIP-8363 PROPOSAL PROPOSES TO DESTROY ADDITIONAL CERTIFICATIONER INCENTIVES AS THE PLEDGE RATE RISES AND ACHIEVE 100 PER CENT DESTRUCTION WHEN 50 PER CENT OF THE SUPPLY IS PLEDGED. AT THE CURRENT LEVEL OF APPROXIMATELY 4.2 MILLION ETH PLEDGES, CIRCULATION WILL BE REDUCED BY APPROXIMATELY 58.6 PER CENT, PLEDGE APR BY ABOUT 56.4 PER CENT AND ETH INCREASES BY ABOUT 633,000 PER YEAR, VALUED AT ABOUT $1.55 BILLION. THE MODEL SHOWS THAT AT A REASONABLE MINIMUM RATE OF RETURN FOR THE PLEDGE, THE SYSTEM MAY EVENTUALLY STABILIZE AT 26 TO 34 PER CENT AND AT 0.3 TO 0.5 PER CENT ANNUAL INFLATION. AN ANALYSIS OF THE ARTICLE SUGGESTS THAT THERE IS NO SIGNIFICANT CORRELATION BETWEEN THE RATE OF RETURN ON PLEDGE AND THE ETH PRICE, BUT THAT THE DERIVATIVE OF THE PROCEEDS OF PLEDGE IS BASED ON SOME 34.2 PER CENT OF THE MORTGAGE MARKET, AND THAT THE CENTRAL OBJECTIVE OF THE PROPOSAL FOR THE POSSIBLE IMPACT OF THE LEVERAGED PLEDGE CYCLE IS TO REDUCE INFLATION AND LIMIT THE RISK OF PLEDGE CONCENTRATION。