The Solana proposal known as SIMD-0228, which has the potential to significantly lower SOL’s inflation rate, had garnered support from 37.8% of network validators at the time of this report.
Based on data, 746 validators, representing nearly 58% of the active total of 1,334, have cast their votes on the proposal. Of these, 37.8% were in favor, 18.5% opposed, and 1.2% chose to abstain. Overall, it appeared that the proposal was on track for failure as of the current moment. Voting will conclude at Epoch 755, which is expected to be reached in approximately 11 hours.
This proposal advocates for a market-driven approach to token emissions to ensure the network doesn’t overextend its budget for security. It is anticipated that this change would positively influence Solana’s decentralized finance landscape and enhance liquidity in on-chain SOL markets.
“Since the start of 2023, the Solana network has undergone considerable changes. At that time, daily on-chain volumes frequently fell below $100 million, indicating limited activity. Nowadays, the ecosystem regularly achieves billions in daily on-chain volume, illustrating a remarkable transformation. Considering this growth, we feel it is the right time to decrease the inflation rate in accordance with SIMD-228,” stated Logan Jastremski, co-founder and managing partner at Frictionless Capital, on X.
Some projections suggest that the proposal could reduce SOL’s inflation rate from 4.5% to roughly 0.87%, which amounts to an 80% cut.
Tagus Capital believes this will have a favorable effect on the price of SOL.
“If the proposal is approved, it would significantly cut staking rewards and the influx of new SOL, potentially enhancing its value. However, reduced rewards might push smaller validators out of the network, which raises concerns about decentralization,” the firm remarked in their newsletter on Thursday.
The firm further emphasized that lower rewards could displace smaller validators, heightening worries about the network’s decentralization.