Solana Validators Weigh In on Major Inflation Reduction Proposal
The SIMD-228 proposal, aiming to slash Solana’s (SOL) inflation by 80%, has garnered 35.7% support from validators. Data from Dune Analytics shows 701 out of 1327 active validators have voted. While 37.5% favor the proposal, 17.2% oppose it, and 1.2% abstained.
If approved, SIMD-228 would considerably reduce staking rewards, decreasing the number of new SOL tokens entering circulation. This could ease selling pressure and perhaps boost SOL’s value.However, it raises concerns about network decentralization. Smaller validators might struggle to stay profitable and could exit, weakening decentralization.
Solana’s current inflation model balances transaction fee burning and staking rewards. With lower transaction costs, fewer tokens are removed from circulation. Staking incentives continue to add fresh SOL at a 6.8% inflation rate,possibly driving down its price.
Before SIMD-228, developers explored options like fixed-rate adjustments. solana’s market performance has been weak lately. SOL is trading at $126, down over 50% from its January peak of $293. Decentralized finance activity has also declined, with total value locked falling from $12 billion to $7 billion.
Monthly fees have dropped significantly, from $250 million in January to $89 million in February, due to low network usage and cooling memecoin trading. While SIMD-228 could reduce supply pressure, its success depends on growing network demand. Reducing inflation alone may not drive a strong recovery without more users and activity.
