- Solana proposed SIMD-0228 to help change Solana’s fixed inflation schedule to a flexible system that could adjust based on staking participation.
- Over 281 quadrillion votes were cast, with a 74% participation rate, but many voted based on their prior beliefs rather than the proposal’s potential impact.
- 60% of a small group of validators, holding up to 500,000 SOL, voted against SIMD-0228, fearing it would reduce their ability to make profits.
Solana proposed SIMD-0228 in a bid to change the network’s inflation rate based on staking activity. Despite receiving strong backing from many community members, the proposal did not stand.
SIMD-228 proposed switching the Solana inflation model from a fixed schedule to one that adjusts with staking activity. So instead of following a set of reduction plans, the new approach proposed to change inflation rates dynamically.
Solana’s Inflation Drops, But Low Staking Raises Concerns
Currently, the supply inflation starts at 8% per year, dropping by 15% annually until reaching 1.5%. Estimates suggest that if the proposal was established, it could have lowered it by up to 80%. As of today, Solana’s inflation stands at 4.66%, with only 3% of tokens staked. The constant inflation can lead to more selling, drop in the price of the token, and the network would reduce its engagement.
On-chain data showed that over 281 quadrillion votes were cast, with a 74% participation rate before voting ended on March 13. Despite strong engagement, voting trends indicate that many chose based on prior beliefs about the change.
Impact of SIMD-0228 on Small-Scale Validators
More than 60% of small validators with up to 500,000 SOL opposed the proposal, with most of their votes against it coming up late Thursday after calls to reject it. Their opposition could be understood to some degree because they’d have been more impacted by the changes.
SIMD-0228, if established, would have impacted small validators by making their operations less profitable. Solana validator SolBlaze was a key opponent, urging others to vote against the proposal.
Although they agreed that lowering Solana’s inflation was necessary, they believed that another approach to it should be taken and SIMD-0228 was not the right solution. After the proposal failed, they celebrated the result, calling it a ‘major win’ for the community. They thanked those who opposed the change, voted against it, and spoke up, saying their efforts led to something remarkable.
The Co-founder of Multicoin Capital, Tushar Jain commented on the votes stating that, despite the proposal being rejected, it was still a big win for Solana’s ecosystem and governance.
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