Solana Validators Debate SIMD-228—Will Inflation Changes Impact SOL?

• SIMD-228 proposes a dynamic inflation model for SOL based on staking participation, impacting token supply and market value.
• Debate on SIMD-228 divides Solana leadership, with concerns over staking yields and its potential effect on institutional investors.

Solana’s community is at a turning point with the debate surrounding Solana Improvement Document (SIMD)-0228, a proposal that could impact the blockchain’s tokenomics.

The proposal, which is set to go to a vote in epoch 753, introduces a nature market-driven inflation model for the network’s SOL tokens. Authored by Tushar Jain and Vishal Kankani of Multicoin Capital, with support from Max Resnick, a key economist at Anza, as noted by ETHNews, the concept aims to redefine the release model for new tokens.

SIMD-0228:

As we head to the vote in epoch 753, I am proud to share that we have spent almost two months discussing SIMD-0228 in public. (Check screenshot for details).

Throughout the process, we incorporated several pieces of community feedback:

1. Transitioned from a… pic.twitter.com/0g138cFGY8

— Vishal Kankani (@kankanivishal) March 6, 2025

However, SIMD-228 proposes a change to Solana’s existing fixed inflation schedule, which is currently set at 4.6% annually. The rate gradually decreases by 15% each year until it stabilizes at 1.5%. Under the new model, the inflation rate would adjust based on the percentage of SOL tokens staked.

If the proportion of staked SOL falls below a target threshold of 33%, the emission rate will increase to induce more staking. Conversely, if the staking rate rises, the emissions would decrease, reflecting that the network requires less security. This inflation model could impact SOL tokens’ supply and market value.

Potential Impact on Stakers and Validators

One of the key concerns surrounding the proposal is its potential effect on the profitability of stakers and validators, particularly smaller participants. As the inflation rate adjusts in response to staking participation, those who stake SOL during periods of high staking could see reduced rewards.

On the other hand, the proposal’s backers argue that the new inflation model could improve the long-term value of SOL by reducing the tokens during times of high staking, thus benefiting long-term holders.

Estimates suggest that under the current staking rate of 65%, the new model could drive the inflation rate below 1% annually. However, if staking participation drops to the 33% target, the inflation rate will rise, leading to higher emissions and more rewards for stakers.

Solana’s Leadership Reacts to SIMD-228

The debate surrounding SIMD-228 has attracted attention from key figures in the Solana network. Some, like Helius founder Mert Mumtaz, have supported the proposal, arguing that it will strengthen the network. Mumtaz emphasized that even if the proposal does not pass, the public discussions around it will benefit the community.

I think SIMD 228 should pass because I believe it makes the network stronger

but even if it doesn't pass — it's good to see strong public discussions from both sides that are always solution-seeking

Solana has grown up before our eyes

— mert | helius.dev (@0xMert_) March 4, 2025

However, Solana Foundation president Lily Liu has voiced concerns about the proposal, calling it “half-baked.” Liu raised alarms about unpredictable staking yields, which could deter institutional investors.

Despite these concerns, Kankani and Resnick, the authors of SIMD-228, have defended the proposal, asserting that it has undergone nearly two months of discussions and incorporates various community inputs.

Solana’s Current Market Situation

As Solana’s community debates the proposal, the price of SOL has fluctuated recently. Currently priced at $143.68, Solana’s market cap stands at $73.09 billion, with a 24-hour trading volume of $4.76 billion.

This reflects a slight decrease in price by 3.61% over the past 24 hours. Despite the price drop, Solana remains a key player in cryptocurrency, ranking 6th in market capitalization.