Solana's key SIMD-228 proposal fails to pass validator vote, token emissions unchanged

Solana's inflation-cutting governance proposal SIMD-228 failed to pass voting that ended Thursday in a record-setting voter turnout.

The Solana Improvement Document-228 proposed reshaping the network's tokenomics by replacing its fixed inflation schedule with a dynamic, market-based system that adjusts SOL token issuance based on staking participation.

The proposed emissions model aimed to decrease inflation rate for Solana below 1% annually at the current staking rate of approximately 65%, while the current fixed inflation schedule is set at 4.6% annually, decreasing by 15% per year until stabilizing at 1.5%.

Proponents of SIMD-228 said it has the potential to benefit long-term holders of SOL by making it scarcer and more valuable, while opponents argued that it may negatively impact the profitability of smaller stakers and validators.

Voting for SIMD-228 began on March 6, during Solana Epoch 753, and required a 66.67% majority of "yes" votes to pass. It concluded by the end of Epoch 755, with 43.6% of all eligible voters casting "yes" votes and 27.4% voting "no." This amounted to 61.4% of the total votes being in favor.

"So issuance will stay the way it is," Mert Mumtaz, CEO of Solana developer platform Helius Labs, said on X.  

The voter turnout for SIMD 228 stood at 74%, higher than any U.S. presidential election in the past 100 years, Solana wrote on X. The 2024 U.S. election where crypto took center stage had a turnout of about 64%.

"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," said Tushar Jain, co-author of SIMD-228 and co-founder of Multicoin Capital, in an X post . "This vote is evidence that the network is thriving and fully decentralized."

On the other hand, another governance proposal SIMD-123 passed voting as Solana Epoch 755 wrapped up. SIMD-123 is a proposal to introduce a mechanism that allows validators to share a portion of their revenue with their stakers, whereas some validators currently opt for off-chain solutions to incentivize stakers. The proposal passed with nearly 75% of yes votes. 

This change is expected to add transparency by moving reward distribution officially onchain.

"SIMD-228 didn't pass, but 123 passed … Even though both proposals were for reducing validator revenue," said Solana Labs co-founder Anatoly Yakovenko. "Opposition to 228 isn't just acting in their own self-interest."