A proposed change to Solana’s token emission model (SIMD-0228) has sparked intense debate among developers, validators, and investors.
The proposal aims to replace the blockchain’s fixed-rate inflation schedule with a market-driven system, adjusting based on staking participation. Supporters argue it will strengthen Solana’s long-term economics, while critics warn it could harm decentralization and validator sustainability.
Background
- SIMD-0228 proposes shifting Solana’s inflation model from a fixed-rate emission schedule to a dynamic, market-based system that adjusts emissions based on network staking activity.
- The proposal was co-authored by Multicoin Capital’s Tushar Jain, Vishal Kankani, and Anza’s Max Resnick, arguing that “smart emissions” will enhance economic efficiency and reduce sell pressure on SOL.
- If implemented, Solana’s inflation rate could drop from 4.7% to approximately 1.5%, depending on staking participation.
- The initiative has been met with mixed reactions—major investors and core developers back it, while smaller validators and some Solana Foundation members oppose it due to concerns over centralization risks.
- Voting on SIMD-0228 is set to begin during Solana Epoch 753, estimated to start Friday evening at 8:30 PM ET.
Why should you pay attention?
- If passed, SIMD-0228 will significantly impact SOL’s supply and staking rewards, affecting both investors and network participants.
- Proponents believe lower inflation will make SOL more appealing to institutional investors, boosting its long-term price performance.
- Critics warn the proposal could lead to validator shutdowns, potentially making Solana more centralized by driving out smaller participants.
- A close vote is expected, meaning the final decision could shift depending on last-minute lobbying efforts.
- This proposal could reshape how Solana competes with other blockchains like Ethereum, which has its own dynamic supply mechanisms through staking.
Who said what?
- Solana co-founder Anatoly Yakovenko supports SIMD-0228, arguing:
“The counter arguments to 228 are pretty bad because the cost of inflation is something on the order of (global average income tax rate * inflation). Or $1-$2 BILLION per year..”
- Helius Labs CEO Mert Mumtaz emphasized its benefits, stating:
“The strongest argument for 228 is that it incentivizes and speeds up the timeline towards a network centered on real economic value.”
- Placeholder VC partner Chris Burniske endorsed the proposal, saying:
“In the long run, real yield comes from what the demand side leaks to the supply side, and inflation is just a bootstrapping mechanism to get to that place.”
- Opponents, such as validator SolBlaze.org, argue it could be damaging:
“Lowering inflation sounds good in theory but is a terrible idea. It will drastically decrease the amount of Solana tokens staked, threatening decentralization and network security.”
- Solana Foundation President Lily Liu voiced skepticism, warning:
“SIMD-0228 is too half-baked. Fixed rates are not dumb and arbitrary; they provide valuable predictability in capital markets.”
Zooming out
- The debate over SIMD-0228 reflects a broader tension in blockchain governance—balancing economic efficiency with decentralization and security.
- Some fear the proposal favors large institutional validators, potentially pricing out smaller participants and centralizing control over Solana’s network.
- Proponents see the change as a necessary step to make Solana more competitive in attracting investment and reducing inflationary pressure on SOL.
- With a two-thirds majority required for approval, the vote remains unpredictable, and further modifications could be introduced before implementation.
