Proposal to Curb SOL Inflation by 80% Faces Limited Endorsement from Solana Validators

Solana’s Inflation Cut Proposal Faces Validator Pushback as Vote Nears Deadline

A proposal to drastically reduce SOL’s inflation rate is struggling to gain enough validator support, raising doubts about its approval. The governance proposal, SIMD-0228, aims to introduce a market-based emission model that would lower Solana’s token inflation by 80%, potentially making SOL more scarce and valuable.

At press time, 746 validators (around 58% of the 1,334 active validators) had participated in the vote, according to Dune Analytics. Of those, 37.8% support the proposal, while 18.5% are against it, and 1.2% abstained. With voting set to close at Epoch 755 in about 11 hours, current data suggests that the proposal is likely to fall short of approval.

What’s at Stake?

If passed, SIMD-0228 would cut SOL’s inflation rate from 4.5% to around 0.87%, significantly reducing the number of new tokens entering circulation. Proponents argue that Solana’s rapid ecosystem growth justifies this change.

“In 2023, daily on-chain volumes were often below $100 million. Now, the network consistently handles billions in volume. Given this, an inflation cut makes sense,” said Logan Jastremski, co-founder of Frictionless Capital, in a post on X.

Potential Benefits & Risks

Research firm Tagus Capital believes that a lower inflation rate could be bullish for SOL, making it more attractive to investors by reducing supply growth.

“Lower token issuance and staking rewards could boost SOL’s price, but smaller validators may struggle to remain profitable, potentially harming network decentralization,” the firm noted in a Thursday report.

With the vote nearing its final hours, the fate of SIMD-0228 remains uncertain. If rejected, Solana may need to explore alternative strategies to balance inflation control with network security.

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