Solana validators to soon vote on key 'SIMD-228' proposal affecting network inflation

The Solana community is debating Solana Improvement Document (SIMD)-0228, a governance proposal that will reshape the network’s tokenomics by introducing a dynamic, market-driven inflation model for SOL tokens.

SIMD-228 is authored by Tushar Jain and Vishal Kankani of Multicoin Capital, with support from Max Resnick, lead economist at Anza, a key player in Solana's development ecosystem.

It proposes a market-driven emissions model that adjusts the issuance of new SOL tokens (inflation rate) based on the percentage of the total SOL supply that is staked.

This proposal seeks to replace Solana's fixed inflation schedule — currently set at 4.6% annually, decreasing by 15% each year until stabilizing at 1.5% — with a system that adjusts emissions based on staking participation. 

If the percentage of staked SOL drops below the target 33% threshold, the emissions rate increases. With a high staking rate, rewards decrease, reflecting that the network doesn’t need to "overpay" for security, thus reducing inflation. However, the proposal may impact the profitability of stakers and validators, especially smaller ones.

Meanwhile, proponents argue that Solana's growing economic activity justifies evolving its monetary policy, explaining that lower emissions during high staking could make SOL scarcer and more valuable, benefiting long-term holders. As such, it could drastically reduce inflation and prevent the annual value leakage of hundreds of millions of dollars.

If the proposal is approved, estimates suggest that under the current 65% staking rate, the new inflation rate could drop below 1% annually. If staking participation post-implementation drops to the 33% threshold, the inflation rate will adjust upward to incentivize staking.

The proposal is expected to undergo voting in epoch 753 and may begin over this weekend.

Ecosystem leaders continue to debate

Solana’s leadership is still debating the proposal and has invited diverse opinions. Solana co-founder Anatoly Yakovenko appears to have given his support, as have other key figures in the ecosystem, such as Helius founder Mert Mumtaz.

“I think SIMD-228 should pass because I believe it makes the network stronger,” Mumtaz said in an X post, adding that even if the proposal fails to get the green light, extensive public discussions will benefit the ecosystem. Helius also released a post thoroughly analyzing the proposal from all angles.

On the other hand, Solana Foundation president Lily Liu stood out as a cautious skeptic, urging a broader rethink of the proposed inflation model. In an X post, she described SIMD-0228 as “too half-baked,” cautioning that its unpredictable staking yields could alienate institutional investors.

The authors, Vishal Kankani and Max Resnick, have defended SIMD-0228 and pushed back against arguments of a rushed process, explaining that the proposal has undergone nearly two months of discussion since January and has incorporated various inputs.