- Solana’s SIMD-228 proposal saw unprecedented participation, with 74% of staked supply voting across 910 validators.
- The proposal, which aimed to introduce a dynamic inflation model, failed with 61.4% approval short of the required 66.67%.
- Despite the rejection, the event was hailed as the largest governance vote in crypto history, reinforcing Solana’s decentralized decision-making strength.
A major proposal to reform Solana’s inflation mechanism has been turned down by stakeholders, but the event is being hailed as the milestone for decentralized governance.
Multicoin Capital’s co-founder, Tushar Jain, on March 14 framed the outcome as evidence of Solana’s governing clout.“Even though our proposal was technically defeated by the vote, this was a major victory for the SOL ecosystem and its governance process,” he stated.
The proposal, identified as SIMD-228, saw significant participation, with around 74% of the staked supply casting votes across 910 validators. Despite this engagement, only 43.6% voted in favor, while 27.4% opposed it, and 3.3% abstained according to Dune Analytics. It fell short of the required 66.67% approval, securing just 61.4%.
Jain emphasized the magnitude of this vote, calling it the largest governance event in crypto history by participant count and total 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,” he explained.
Solana’s official X account further underscored the event’s significance, claiming, “Solana SIMD-228 voter turnout was higher than every U.S. presidential election in the last 100 years.”
The rejected proposal was to transition Solana’s inflation model to a dynamic, responsive market-based one from its fixed schedule. Under the current framework, inflation starts at 8% annually and decreases by 15% annually until it becomes fixed at 1.5%. SIMD-228 suggested making inflation variable based on staking participation and not at a fixed rate.
Estimates suggested this shift could have cut inflation by as much as 80%. As of now, Solana’s inflation rate stands at 4.66%, with just 3% of its total supply staked, according to Solana Compass.
Solana Inflation Proposal Fails, Governance Thrives
Supporters argued that the dynamic inflation model would make the network more stable by increasing security with inflationary adjustments based on staking participation, with real-time feedback to staking level and no strict schedule to follow, and driving increased use of SOL in DeFi applications.
However, critics highlighted potential downsides, such as increased difficulty for smaller validators to remain profitable, added complexity to Solana’s economic model, and potential instability from unpredictable staking fluctuations.
Although the high-stakes event in governance, SOL’s price is $ 124.92 with 24-hour trading volume of $ 6.54B and, market cap of $ 63.55B. The price of SOL went up by 0.99% in the last 24 hours. Yet, the overall trend is bearish, with the asset losing almost 60% in two months when the memecoin mania wore off.
Additionally, SOL’s network revenue has plummeted over 90%, a consequence of declining demand for minting and trading memecoins.
Even with the rejection of SIMD-228, the volume of participation helped to cement Solana’s position at the forefront of decentralized governance even more. The ecosystem demonstrated its ability to make efficient, mass-level decision-making, an integral feature as the space continues to evolve.
The controversy surrounding Solana’s inflation model is by no means at an end, yet one thing is for sure: its governance process is thriving.
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