The Solana Improvement Document (SIMD-0411) went live, proposing a significant adjustment to the network’s tokenomics.
Authored by Solana developers under GitHub handles 0xIchigo and lostintime101, this initiative aims to double the annual disinflation rate from -15% to -30% without altering current staking rewards or introducing new mechanisms like fee burns.
The proposal has sparked widespread discussion in the Solana community, with figures like Helius CEO Mert Mumtaz calling it a potential “permanent change” to the Layer-1 blockchain’s outlook.
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Solana’s inflation model was designed to start at 8% in 2020, gradually declining to a long-term target of 1.5% by 2032. Under the existing schedule. Current inflation rate: ~4.5-4.8%. Disinflation occurs in 15% increments every ~1 year 180 epochs. Time to reach 1.5%: Approximately 6.2 years from now.
The SIMD-0411 proposal accelerates this curve: Disinflation jumps to 30% increments annually. Projected time to 1.5%: ~3.1 years by early 2029. Total emissions reduction: 22.3 million SOL $2.9 billion at current prices over the next six years.
This creates a “double disinflation” effect, often dubbed the “double disinflation plan” in community discourse, making SOL scarcer faster and aligning Solana’s monetary policy more closely with Ethereum’s low-issuance model post-Merge.
Solana’s high throughput thousands of TPS and low fees have driven explosive growth, but the network’s inflation has been criticized for “overpaying” for security amid rising fee revenue. With ~70% of SOL staked, emissions fund validator rewards, but proponents argue the current curve dilutes value unnecessarily.
The timing aligns with bullish catalysts: Record inflows into newly launched Solana ETFs (e.g., 21Shares’ TSOL on CBOE, plus Bitwise, Grayscale, Fidelity, and VanEck products) and a broader market rebound. SOL trades around $130, up ~2.5% in the last 24 hours but down 7% weekly.
Validators will vote via on-chain governance. Early signals are positive, with no major opposition reported yet. Faster disinflation could squeeze smaller validators’ margins up to 47 potentially unprofitable in 3 years, though the proposal claims no immediate cuts. Critics from prior debates worry about “analysis paralysis” stalling innovation.
Potential Impact on SOL Price and Ecosystem
If passed, this could reinforce SOL’s narrative as a “mature asset” with stronger DeFi incentives and lower “risk-free” rates for borrowing. Short-term price scenarios:Bull case: ETF inflows + scarcity narrative push SOL toward $144 by end-November per some forecasts.
Broader market risk-off or technical death cross drags it to $100-125 support. This isn’t financial advice—crypto markets are volatile. Track the GitHub pull request for updates: SIMD-0411. The proposal underscores Solana’s maturing governance, prioritizing sustainability amid 2025’s ETF-fueled momentum.
SIMD-0228, formally titled “Proposal for Introducing a Programmatic, Market-Based Emission Mechanism Based on Staking Participation Rate,” was a pivotal governance proposal in the Solana ecosystem.
Introduced in late February 2025 and put to a validator vote in early March, it sought to overhaul Solana’s fixed inflation schedule by introducing a dynamic, market-driven model for token emissions. Authored primarily by Vishal Kankani of Multicoin Capital, the proposal aimed to align SOL issuance more closely with network security needs and economic incentives, potentially slashing inflation by up to 80% under certain conditions.
However, it ultimately failed to pass in a highly contentious vote on March 13, 2025, highlighting deep divisions in Solana’s governance around validator incentives and decentralization.
This analysis breaks down the proposal’s motivations, mechanics, implementation details, risks, community reactions, voting outcomes, and lasting implications. Solana’s original tokenomics, established in 2020, featured an initial 8% annual inflation rate that disinflates by 15% annually until reaching a steady-state 1.5% by around 2030-2032.
This model was designed to bootstrap network security through staking rewards, with ~70% of SOL typically staked across validators. However, as Solana matured—with surging transaction volumes, MEV (Maximal Extractable Value), and priority fees generating substantial revenue—the fixed schedule came under fire for “over-issuing” SOL, diluting token value and creating sell pressure from reward dumps.
Reduce emissions to the “minimum necessary” to secure the network, shifting from passive issuance to revenue-driven incentives like fees and MEV. Use staking dynamics as a signal for network health, incentivizing higher participation without arbitrary cuts.
Address criticisms that high inflation ~4.5-5% at the time outpaced revenue growth, potentially harming SOL’s price and attractiveness to investors. Drew inspiration from models like Livepeer’s 50% staking participation target, which dynamically adjusts rewards to balance security and participation.
Proponents, including Multicoin and figures like Mert Mumtaz, argued it would make Solana’s monetary policy more “Ethereum-like” post-Merge, emphasizing low issuance amid high utility. At its core, SIMD-0228 replaced the fixed disinflation curve with a feedback loop tied to staking participation rate (s), defined as:s = (Total SOL Staked) / (Total SOL Supply)
The model targeted s = 50% as the “equilibrium” point—below this, emissions increase to encourage staking; above it, emissions decrease to avoid over-incentivizing and potential centralization. The adjustment formula was: ?i = k × s_target – s_actual.
Where:i = Annual inflation rate emissions as % of supply. k = Speed coefficient 0.05 per annum, allowing gradual adjustments over ~20 years to reach equilibrium. ?s = Deviation from target (e.g., if s = 40%, ?s = 10%, so ?i = +0.5%). This created a self-regulating system: Low staking triggers higher rewards to bootstrap security; high staking reduces issuance as fees/MEV take over.
Under optimistic scenarios, inflation could drop to ~1% within 2-3 years, saving ~$3.5 billion in emissions over five years. The mechanism would be hardcoded into the Solana runtime via a hard fork, with staking ratio calculated epochally every ~2-3 days using on-chain data.
No immediate changes; adjustments begin post-activation, with simulations showing minimal disruption to current ~6-7% APY for stakers. Validators vote via on-chain signals; delegators could influence via SIMD-0123 reward sharing.
The full draft was discussed on GitHub solana-improvement-documents #229 and the Solana Forum, with simulations shared to model outcomes under varying s values. Automatically scales rewards to actual security needs, potentially lowering long-term inflation to <2% faster than the fixed curve.
Critics argued staking ratio ignores revenue growth or deflation; suggested tying to REV instead. Rapid disinflation could deter new stakers, creating a feedback loop of declining participation. 50% s was seen as too low; suggestions for 67% to maximize “useful” security.
Decentralization Fears: Broader concerns that cuts would centralize power, as noted by Anza and Figment. The failure preserved the status quo but accelerated calls for reform, paving the way for simpler proposals like SIMD-0411 doubling disinflation without dynamics.
SOL dipped ~10% post-vote amid broader market weakness, but long-term, it underscored governance maturation: High turnout showed engagement, but revealed needs for better delegator tools (e.g., Galaxy’s MESA framework).