- Solana stakeholders have rejected a proposal to cut the network’s inflation rate
- The proposal wanted to reduce the network’s inflation rate by 80%
- Close to 44% of voters supported it while 27.3% rejected it
Stakeholders on the Solana blockchain have rejected a proposal to shrink the network’s inflation rate by 80%. Close to 44% of voters supported it failing to get the required threshold of at least 66.67% of the votes to pass. The proposal, SIMD-228, suggested moving Solana’s inflation system to a flexible market-oriented model that would actively adjust the network’s inflation based on staking activities, replacing the existing system that handles inflation based on a pre-determined rate.
Inflation Reduced Every “Epoch Year”
The network’s current inflation rate is 4.65%, but Solana targets a final rate of 1.5% through set reductions of 15% every “epoch year, ” which is roughly 1.5 calendar years. According to Helius, a Solana tools provider, changing the inflation management model would minimize SOL selling pressure, increase the network’s security, and stimulate SOL-based DeFi activities.
Helius noted that implementing the proposal would present some weaknesses “in environments with low stakes and penalty-driven incentives.” It added that such shortcomings would hurt the blockchain’s stability, “increase token issuance, and cause more validators to exit.”
The Solana tools provider, however, noted that the network would recover faster from the effects of the weaknesses using the proposed inflation model than the current inelastic inflation curve.
Solana Governance Process Showcased
Multicoin Capital co-founder Tushar Jain said that although the proposal was rejected, it showcased the strength of the Solana governance process. Jain described it as “the biggest crypto governance vote ever,” adding that it was more of a social, rather than a technical, scaling stress test.
SIMD-228 was a historic milestone for crypto.
Even though our proposal was technically defeated by the vote, this was a major victory for the Solana ecosystem and its governance process. Over 74% of stake turned up to vote on the proposal. Yes votes were 43.6% of stake, no…
— Tushar Jain (@TusharJain_) March 14, 2025
Solana compared the proposal’s voting process to that of the United States presidential election noting that it had the highest voter turnout.
Solana SIMD 228 voter turnout was higher than every US presidential election in the last 100 years pic.twitter.com/qJsyR1deyp
— Solana (@solana) March 13, 2025
With the Solana community rejecting the proposal, it’s to be seen whether there will be a rebirth of SIMD-228 incorporating community feedback.
