Last updated on March 15th, 2025 at 09:37 am
A proposal to revamp Solana’s inflation system has been rejected by stakeholders, yet it is being celebrated as a milestone for the network’s governance.
Multicoin Capital co-founder Tushar Jain described the outcome as a victory, stating on March 14, “Even though our proposal was technically defeated by the vote, this was a major victory for the Solana ecosystem and its governance process.”
The proposal, known as SIMD-228, aimed to shift Solana’s inflation model from a predetermined schedule to a dynamic, market-driven approach. Despite significant participation—74% of the staked supply across 910 validators—the proposal fell short of the required 66.67% approval, securing only 61.4%. According to Dune Analytics, 43.6% voted in favour, 27.4% opposed, and 3.3% abstained.
Jain highlighted that this was the largest governance vote in crypto history, both in terms of participant numbers and the market cap involved. “This was a meaningful scaling stress test — a social, rather than technical, stress test — and the network passed despite a wide stratification of diverging opinions and interests.”
Solana’s official X account also emphasized the vote’s scale, stating, “Solana SIMD-228 voter turnout was higher than every U.S. presidential election in the last 100 years.”
Under Solana’s current system, inflation starts at 8% annually, decreasing by 15% per year until it reaches 1.5%. SIMD-228 proposed a dynamic adjustment mechanism, linking inflation rates to staking participation instead of following a fixed schedule. Analysts estimated this could have reduced inflation by as much as 80%.
At present, Solana’s inflation rate stands at 4.66%, with just 3% of the total supply staked, according to Solana Compass. Proponents of SIMD-228 argued that adjusting inflation based on staking levels would stabilize the network, prevent unnecessary token issuance, and encourage more active SOL use in DeFi. The model also aimed to enhance network security by increasing inflation when staking participation dropped.
Despite its potential benefits, the proposal also raised concerns. Critics pointed out that lower inflation could hurt smaller validators’ profitability. The increased complexity of the model and potential instability from abrupt shifts in staking rates were also key reasons for the opposition.
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