The Solana community is discussing a governance proposal called SIMD-0228, which aims to reshape the network's token economics by introducing a dynamic market-driven issuance model. Written by Tushar Jain and Vishal Kankani from Multicoin Capital, the proposal is supported by Max Resnick, Chief Economist at Anza. The proposal suggests adjusting the issuance of new SOL tokens (inflation rate) based on the percentage of staked SOL in relation to the total supply. If the percentage of staked SOL falls below the target threshold of 33%, the issuance rate will increase; conversely, a higher staking rate will reduce rewards, thereby lowering inflation. Supporters argue that adjusting monetary policy is reasonable as Solana’s economic activity grows, and a lower issuance may make SOL more scarce and valuable, benefiting long-term holders. If the proposal is passed, the new inflation rate could fall below 1% per year at the current staking rate of 65%. Voting is expected to take place in the 743rd epoch.

MAG7.SSI

The Solana community is debating Solana Improvement Document (SIMD)-0228, a governance proposal that will reshape the network’s tokenomics by introducing a dynamic, market-driven emissions model for SOL tokens.SIMD-228 is authored by Tushar Jain and Vishal Kankani of Multicoin Capital, with support from Max Resnick, lead economist at Anza, a key player in Solana's development ecosystem.It proposes a market-driven emissions model that adjusts the issuance of new SOL tokens (inflation rate) based on the percentage of the total SOL supply that is staked.This proposal seeks to replace Solana's fixed inflation schedule — currently set at 4.6% annually, decreasing by 15% each year until stabilizing at 1.5% — with a system that adjusts emissions based on staking participation.If the percentage of staked SOL drops below the target 33% threshold, the emissions rate increases. With a high staking rate, rewards decrease, reflecting that the network doesn’t need to "overpay" for security, thus reducing inflation. However, the proposal may impact the profitability of stakers and validators, especially smaller ones.Meanwhile, proponents argue that Solana's growing economic activity justifies evolving its monetary policy, explaining that lower emissions during high staking could make SOL scarcer and more valuable, benefiting long-term holders. As such, it could drastically reduce inflation and prevent the annual value leakage of hundreds of millions of dollars.If the proposal is approved, estimates suggest that under the current 65% staking rate, the new inflation rate could drop below 1% annually. If staking participation post-implementation drops to the 33% threshold, the inflation rate will adjust upward to incentivize staking.The proposal is expected to undergo voting in epoch 743, which is expected to begin over the weekend.

Solana is about to vote on the key proposal SIMD-228 that affects network inflation.