Thanks to mechanisms like MEV (Maximum Extractable Value) , earning SOL has become a much sweeter deal.
In Q4-2024 alone, Jito Tips—a measure of MEV—brought in a whopping $430 million (or 2.1 million SOL). Compare that to just $42 million (300k SOL) in Q1-2024.
Historically, Solana has relied on a fixed emissions schedule to attract stakers and validators, but this setup is starting to look a bit “old hat.” Emissions don’t adjust based on network activity, meaning they can overshoot what’s needed to keep things secure.
That’s where “ Smart Emissions ” come in—a market-driven, dynamic approach that could replace today’s static formula. Smart Emissions are all about working smarter, not harder. Here’s the gist:
- Dynamic Security: When staking drops, Smart Emissions offer bigger incentives to secure the network.
- Minimal Issuance: They reduce SOL inflation to the bare minimum necessary to maintain security.
Solana inflation reduction proposal is now live pic.twitter.com/OONWftqz4u
— mert | helius.dev (@0xMert_) January 16, 2025
This shift benefits the Solana ecosystem in four big ways:
- Avoiding Centralization: High inflation centralizes ownership, as unstaked SOL gets diluted over time. Smart Emissions keep ownership more balanced.
- Boosting DeFi Growth: Lower inflation reduces the “risk-free” staking rate, making decentralized finance (DeFi) applications more attractive to users and developers.
- Easing Selling Pressure: High emissions force stakers to sell SOL , especially for taxes, creating unnecessary market strain. Smarter emissions reduce this burden.
- Improving Perception: Even if inflation isn’t technically a cost, many see it that way, which hurts SOL’s reputation. Less inflation means fewer misconceptions and healthier market signals.
New: @multicoincap has published a proposal that may reduce Solana’s inflation.
This Solana SIMD would replace the current fixed SOL emissions curve with a market-based mechanism — and SOL’s inflation could decrease.
Here’s how this major update to SOL inflation would work (🧵)
— Jack Kubinec (@whosknave) January 16, 2025
Learning from the Past
Bitcoin’s static issuance model is great for its goal of becoming digital gold, but Solana’s mission is different. Solana aims to synchronize global activity at lightning speed, and that calls for a more flexible approach.
By linking emissions to network activity, Solana can step away from “dumb emissions” and let markets guide its monetary policy. Imagine this as moving from a one-size-fits-all strategy to a custom-tailored solution.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
