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Solana's Inflation Reduction Proposal Rejected by Stakeholders

Coin WorldThursday, Mar 13, 2025 10:56 pm ET
1min read

Solana's recent proposal to significantly reduce its inflation rate by up to 80% has been rejected by stakeholders, marking a pivotal moment in the network's governance process. The proposal, SIMD-228, aimed to transition Solana's inflation system from a fixed schedule to a dynamic, market-based model. This change would have adjusted inflation rates based on staking participation rather than following a pre-set decrease.

The voting process saw a high level of engagement, with around 74% of the staked supply participating across 910 validators. However, the proposal fell short of the required two-thirds majority, receiving only 61.4% of the votes in favor. This outcome, while disappointing for those advocating for the change, was hailed as a victory for the network's governance process. The high voter turnout and the diverse range of opinions expressed were seen as a positive indicator of the network's health and resilience.

The current inflation rate of Solana stands at 4.66%, with only 3% of the total supply staked. The proposed dynamic model could have reduced inflation by as much as 80%, potentially stabilizing the network and minimizing unnecessary token issuance. However, the complexity and potential instability introduced by the new model were significant concerns for many validators. The proposal's failure highlights the delicate balance between innovation and stability in blockchain governance.

The rejection of SIMD-228 has several implications for Solana. The network will continue to operate with a higher inflation rate, which could impact the value and stability of its native token, SOL. Higher inflation can increase selling pressure, reduce the token's price, and discourage network use. The failure of the proposal also underscores the importance of community engagement and consensus-building in blockchain governance. The debate surrounding SIMD-228 involved validators expressing concerns about the potential impact on the network's ecosystem and the need for a more gradual approach to inflation reduction.

Looking ahead, Solana may need to explore alternative strategies to maintain its competitiveness and attractiveness. This could involve implementing other economic measures, such as adjusting staking rewards or introducing new tokenomics models. The failure of the proposal may also prompt the Solana community to reevaluate its governance processes and consider ways to improve consensus-building and decision-making. As the blockchain landscape continues to evolve, Solana will need to address these challenges and adapt to maintain its position in the market.

Comments

Post
rbrar33
03/14
Solana's inflation rate might burn us long-term
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ConstructionOk6948
03/14
High voter turnout is lit. Solana's got engagement, even if the proposal didn't make the cut. Could be a win for governance vibes.
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Tiger_bomb_241
23 hour ago
@ConstructionOk6948 Makes sense
0
slumbering-gambit
03/14
Community engagement strong, but consensus tricky in crypto.
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jy725
03/14
Solana's governance process is a wild ride. 61.4% for a dynamic model? Not enough. What's next for SOL?
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mrdebro44
22 hour ago
@jy725 Not enough, for sure. SOL needs better stonks.
0
Outrageous-Rate-4080
22 hour ago
@jy725 Rejection was a bummer. What's next?
0
TheLastMemeLeft
03/14
$SOL might face pressure if inflation doesn't chill. But hey, staking still rewards. Not ditching my SOL stash just yet. 🚀
0
rubiyan
23 hour ago
@TheLastMemeLeft How long you planning to hold SOL? Curious if you're thinking long-term or just riding the staking rewards wave.
0
Nichix8
03/14
SOL value might dip with high inflation, brace yourselves.
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WoodKite
03/14
Staking participation should reflect in rewards, not inflation.
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AlmightyAntwan12
03/14
Solana's proposal got wrecked, but 61.4% approval ain't shabby. Shows the network's got life, even if it's stuck on fixed inflation. 🤔
0
Critical-Database-49
03/14
Dynamic model too risky, Solana plays it safe.
0
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03/14

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0
Particular-Ad-8433
21 hour ago
@Angela k 😂
0
Most_Caramel_8001
03/14
Rejection might mean SOL stays volatile. If you're in for long haul, maybe not a big deal. If you're trading, watch those staking rewards.
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Holiday_Context5033
03/14
Dynamic model sounds complex, might've spooked validators. Sometimes less flashy is better. Solana might stick to what it has and call it a day.
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Repturtle
22 hour ago
@Holiday_Context5033 True, complexity can spook devs. Solana might stick to its current model.
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LoinsSinOfPride
03/14
Inflation at 4.66% ain't great. Higher token issuance can spook investors. Maybe Solana needs a staking reward tweak?
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TailungFu
03/14
4.66% inflation ain't crazy high. If you're staking, small impact. If you're HODLing, SOL should be fine long-term. Just my 2 cents.
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AGailJones
03/14
Solana's got time to figure it out. Crypto's all about evolution. Maybe they'll find a balance that keeps devs and validators happy.
0
Tiger_bomb_241
21 hour ago
@AGailJones Fair enough
0
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
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