Solana Validators Spark Debate: 37% Back Bold SOL Inflation Cut Plan

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 plan, 17.2% oppose it. If approved, it would significantly cut staking rewards, reducing new SOL tokens entering circulation.

Some worry this could impact network decentralization, though it might ease selling pressure. Solana’s inflation model balances transaction fee burning and staking rewards. With lower transaction costs, fewer tokens are removed, and staking incentives add fresh SOL at a 6.8% rate, potentially lowering its price. SIMD-228 seeks to lower staking rewards, decreasing supply and possibly boosting SOL’s value. However, smaller validators might struggle to stay profitable, risking network decentralization.

Developers considered various options, including fixed-rate adjustments. Solana’s market performance has been weak, with SOL down over 50% from its January peak.Decentralized finance activity has also declined, with total value locked falling from $12 billion to $7 billion. Monthly fees dropped from $250 million in January to $89 million in February. Reducing inflation alone may not suffice without increased network demand.

Key points:

• 37.5% of validators support SIMD-228.
• Network usage has dropped,affecting fees and token value.
• Reducing inflation could help, but more users are needed for a strong recovery.

Before SIMD-228, developers explored other solutions. The proposal could reduce supply pressure but needs expanding network demand for success. The network’s total value locked has fallen, and memecoin trading has cooled off.