Solana Proposal to Slash SOL Inflation Faces Uphill Battle with Limited Validator Support
A new Solana governance proposal, SIMD-0228, aims to drastically reduce SOL’s inflation rate, which could potentially strengthen the token’s value. However, as of now, the proposal appears unlikely to pass due to limited validator backing.
According to Dune Analytics, 746 validators—representing nearly 58% of the 1,334 active validators—have cast their votes. Of these, 37.8% supported the proposal, 18.5% opposed it, and 1.2% abstained. With voting set to conclude at Epoch 755 in approximately 11 hours, the proposal is currently on track for rejection.
Market-Based Token Emission and Potential Impact on DeFi
The proposal introduces a market-driven approach to SOL emissions, aimed at preventing excessive spending on network security. Proponents believe this change could enhance Solana’s decentralized finance (DeFi) ecosystem and improve liquidity in on-chain SOL markets.
“Since 2023, Solana has evolved tremendously. Back then, daily on-chain volumes were often below $100 million, but today, the network regularly surpasses billions in volume,” said Logan Jastremski, co-founder and managing partner at Frictionless Capital, in a post on X. “Given this progress, now is the right time to reduce inflation in alignment with SIMD-0228.”
If implemented, the proposal could lower SOL’s inflation rate from 4.5% to approximately 0.87%—an 80% reduction.
Potential Price Impact and Decentralization Concerns
Tagus Capital predicts the proposal, if passed, could have a bullish effect on SOL’s price.
“A successful vote would sharply cut staking rewards and new SOL issuance, potentially driving up the token’s value,” the firm wrote in a newsletter on Thursday. “However, a reduction in staking incentives could force smaller validators out of the network, raising concerns about decentralization.”
With time running out before the vote closes, the fate of SIMD-0228 remains uncertain, but its potential long-term implications for Solana’s economy and network security are being closely watched.
