Solana’s governance proposal SIMD-228, which aimed to introduce a dynamic token emission model to reduce SOL inflation, failed to pass after a record-breaking validator vote.
The proposal received 61.4% support, falling short of the 66.67% majority needed, meaning Solana’s current fixed inflation schedule will remain unchanged.
Background
- SIMD-228 proposed replacing Solana’s fixed inflation model (which currently decreases by 15% per year until stabilizing at 1.5%) with a market-driven emissions system that adjusts based on staking participation.
- If passed, the proposal would have dropped SOL’s inflation rate below 1% annually, assuming the staking rate remained at 65%.
- Supporters argued that the change would make SOL scarcer and more valuable in the long run, benefiting long-term holders.
- Critics opposed it, citing concerns that it could reduce profitability for smaller validators and stakers, potentially leading to centralization risks.
- The vote ran from March 6 to March 14, ending with Solana Epoch 755. It required two-thirds (66.67%) approval but only achieved 61.39% support, falling short despite significant backing.
- Turnout for the vote reached 74%, the highest voter participation in Solana’s history and even surpassing U.S. presidential election turnouts in the past century.
Why should you pay attention?
- The failure of SIMD-228 means Solana’s fixed inflation model remains unchanged, keeping the current 4.6% annual issuance rate in place for now.
- This was the largest governance vote in crypto history, demonstrating Solana’s active and decentralized governance process.
- Validator participation in network decisions is increasing, signaling a maturing governance system that could shape Solana’s long-term tokenomics.
- Another proposal, SIMD-123, successfully passed, allowing validators to share revenue with stakers transparently on-chain, which could impact staking incentives and reward structures.
- The debate over Solana’s tokenomics is far from over, as developers and validators continue to push for economic adjustments to balance growth and decentralization.
Who said what?
- Mert Mumtaz, CEO of Helius Labs, acknowledged the outcome, stating:
“So issuance will stay the way it is.”
- Tushar Jain, co-author of SIMD-228 and co-founder of Multicoin Capital, highlighted the scale of the vote, noting:
“SIMD-228 was the biggest crypto governance vote ever—by both the number of participants and participating market cap of any ecosystem, chain, or network.”
- Solana Labs co-founder Anatoly Yakovenko commented on the unexpected vote split between SIMD-228 and SIMD-123, saying:
“SIMD-228 didn’t pass, but 123 did … Even though both proposals were for reducing validator revenue. Opposition to 228 isn’t just acting in their own self-interest.”
Zooming out
- Solana’s governance process is evolving, with higher participation rates signaling increased validator engagement in protocol decisions.
- The rejection of SIMD-228 suggests that validator incentives remain a key concern, as many opposed changes that could reduce profitability for smaller operators.
- With inflation still at 4.6% annually, discussions on reducing token emissions may resurface, especially as Solana competes with other Layer 1 networks that have more aggressive deflationary mechanisms.
- Validator revenue distribution changes (SIMD-123) passing while SIMD-228 failed suggests stakers and validators prioritize direct reward structures over long-term inflation cuts.
- Future governance proposals may focus on compromise solutions, balancing decentralization, validator profitability, and SOL’s long-term supply mechanics.
