SIMD-228 Proposal: Solana (SOL) to Cut Inflation by 80%!
Jakarta, Pintu News SIMD-228’s proposal to cut Solana inflation by 80% has received support from 35.7% of Solana validators.
Based on data from Dune Analytics, out of 1,327 active validators, 701 have cast their votes.
With 1.2% abstaining, 17.2% against, and 37.5% in favor, this proposal is a hot topic among the Solana community.
Proposal Details and Current Support
If approved, SIMD-228 will drastically reduce the staking rewards, which will reduce the number of new Solana tokens (SOL) in circulation. This is expected to reduce selling pressure in the market. Solana’s inflation model currently relies on a balance between burning transaction fees and staking rewards.
During periods of high network traffic, more fees are burned, which helps offset inflation. However, fewer tokens are taken out of circulation as transaction fees decrease. Staking incentives continue to add new SOL supply at an inflation rate of 6.8%, which may depress token prices.
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Impact on Validators and Decentralization
The reduction in staking rewards proposed by SIMD-228 may increase the value of Solana (SOL) by reducing supply. However, small validators with low or zero commission rates may find it difficult to remain profitable and may be forced out of the network.
If enough validators leave the network, Solana’s decentralization could be threatened, raising questions about its long-term sustainability. Before settling on SIMD-228, Solana developers had considered several options, including flat-rate adjustments.
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Market Performance and Future Prospects
Solana’s recent market performance has shown a decline. On March 13, Solana (SOL) was trading at $126, down more than 50% from its peak of $293 in January. Data from DefiLlama shows a decline in decentralized finance activity, with the total value locked on the network falling from $12 billion in January to $7 billion.
With the decrease in network usage, mainly due to the easing of the memecoin trade, monthly fees also dropped significantly, from $250 million in January to $89 million in February.
While the approval of SIMD-228 may alleviate supply pressures, its success depends on increased network demand. Reducing inflation alone may not be enough to drive a strong recovery without increasing users and activity.
Conclusion
The decision on the SIMD-228 proposal will largely determine the future of the Solana ecosystem. Given the challenges, the community and developers must carefully weigh the long-term impact of any decisions made, especially in relation to the health and decentralization of the network.
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Reference
- Crypto News. Solana Validators Vote to Implement SIMD 228, Cut SOL Inflation by 2025. Accessed on March 14, 2025
- Featured Image: Coinmarketcap
