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The Solana community is currently engaged in discussions regarding a governance proposal, Solana Improvement Document (SIMD)-0228, which aims to transform the community’s tokenomics by implementing a dynamic, market-responsive inflation model for SOL tokens.
This proposal, created by Tushar Jain and Vishal Kankani from Multicoin Capital, along with Max Resnick, the lead economist at Anza, seeks to replace Solana’s fixed inflation schedule with a framework that modifies token emissions according to staking participation levels.
Presently, Solana adheres to a fixed inflation schedule that begins at 4.6% annually and decreases by 15% each year until it stabilizes at 1.5%.
New Proposal Suggests a More Flexible Approach
SIMD-0228 proposes a more adaptable strategy, increasing emissions when staking participation drops below a 33% threshold and decreasing emissions when staking levels are elevated.
The rationale behind this model is that a higher staking rate indicates sufficient network security, which allows for reduced rewards and lower inflation.
Proponents contend that this mechanism would enhance the scarcity and value of SOL, benefiting long-term holders while preventing excessive token dilution.
Under the proposed model, with the current staking rate at 65%, inflation could fall below 1% annually.
If staking levels decline to the 33% threshold, the inflation rate would increase to encourage participation.
The proposal is anticipated to be put to a vote in epoch 753, with discussions intensifying among Solana’s leadership and the wider ecosystem participants.
Notably, Solana co-founder Anatoly Yakovenko and Helius founder Mert Mumtaz have expressed their support for SIMD-0228, with Mumtaz asserting that it would bolster the network.
He mentioned that even if the proposal does not pass, the extensive debate surrounding it will contribute to the ecosystem’s development.
I believe SIMD 228 should pass because I think it strengthens the network
but even if it doesn’t pass — it’s encouraging to see robust public discussions from both sides that are always solution-oriented
Solana has matured before our eyes— mert | helius.dev (@0xMert_) March 4, 2025
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Helius has also published a comprehensive analysis examining the potential effects of the proposal.
However, not all members of the Solana community are convinced.
Lily Liu, president of the Solana Foundation, has voiced doubts, labeling SIMD-0228 as “too half-baked” and cautioning that its unpredictable staking yields could dissuade institutional investors.
She has called for a more thorough evaluation of the proposed model prior to its implementation.
In response, the authors of the proposal defended their plan, stating that it has undergone nearly two months of discussions and has incorporated various inputs from the community.
Solana ETF Competition Intensifies
It is important to note that competitors are rapidly advancing with their Solana ETFs.
Investment giant Franklin Templeton has recently submitted a registration for the Franklin Solana Trust in Delaware.
This filing follows similar applications from Canary Capital and Grayscale, both of which have already been acknowledged by the U.S. Securities and Exchange Commission (SEC).
VanEck was the first to propose a Solana ETF in June 2024, leading to a series of filings from major asset managers.
However, BlackRock has notably been absent from the competition for a Solana ETF.
Regulatory challenges could significantly impact the timeline for a Solana ETF. Despite these obstacles, Bloomberg ETF analysts estimate a 70% probability of Solana ETFs receiving SEC approval.
NEW: @EricBalchunas and I examined the filings for spot crypto ETFs. We’re assigning relatively high odds of approval across the board. Currently focused on Litecoin, Solana, XRP, and Dogecoin.
Here’s the table with the odds and additional details: pic.twitter.com/xaXaNXLb0M— James Seyffart (@JSeyff) February 10, 2025
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