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Solana Proposal, Which Could Cut SOL Inflation by 80%, Gains Limited Validator Support
If approved, the proposal could lead to a sharp reduction in the SOL inflation rate, potentially boosting the token's value.
What to know:
- The Solana proposal, SIMD-0228, which aims to drastically reduce SOL's inflation rate, has seen only 55% of validators vote, of which only 37.8% voted in favor.
- The proposal advocates for a market-based token emission mechanism, which could positively impact Solana-based decentralized finance and boost liquid onchain SOL markets.
- If approved, the proposal could reduce SOL's inflation rate from 4.5% to around 0.87%, potentially boosting its value, but it could also force smaller validators out, raising concerns about network decentralization.
The Solana proposal, called SIMD-0228, which could cause a drastic drop in SOL's inflation rate, had the support of 37.8% of the network validators at press time.
Per Dune Analytics, 746 validators, equating to nearly 58% of the total active validators of 1334 have voted on the proposal. 37.8% voted in favor of the proposal, 18.5% were against, and 1.2% abstained from voting. Overall, the proposal seemed headed for a failure as of writing. Voting ends at Epoch 755 scheduled to be reached in about 11 hours.
STORY CONTINUES BELOW
The proposal bats for a market-based token emission mechanism to ensure the network doesn't overpay for security and is expected to have positive effects on Solana-based decentralized finance and boost liquid onchain SOL markets.
"Since 2023, the Solana network has transformed significantly. Back then, on-chain volumes were often below $100 million daily, reflecting limited activity. Today, the ecosystem consistently achieves billions in daily on-chain volume, marking a dramatic shift. Given this progress, we believe now is the opportune moment to reduce the inflation rate in line with SIMD-228," Logan Jastremski, co-founder and managing partner at frictionless Capital, said on X.
Per some estimates, the proposal could see SOL's inflation rate slide from 4.5% to around 0.87%, an 80% reduction.
Tagus Capital expects that to have a positive impact on SOL's price.
"If approved, it would significantly reduce staking rewards and fresh SOL supply, potentially boosting its value. However, lower rewards could force smaller validators out, raising concerns about network decentralization," the firm said in the newsletter Thursday.
"However, lower rewards could force smaller validators out, raising concerns about network decentralization," the firm added.
Omkar Godbole
Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.
