Solana Proposal Seeks to Transform $SOL into Deflationary Currency
- Solana Proposal: Focus on “Ultra-Sound Money”
- Variable inflation: aims to balance staking and emissions
- Dynamic emissions: direct impact on the value of SOL
Multicoin Capital has introduced a new step towards optimizing Solana’s economics through proposal SIMD-0228, which suggests make the issuance of $SOL dynamic. The initiative aims to adjust the inflation rate variably, depending on the staking participation, targeting around 50% of tokens in stake. If this percentage is exceeded, the issuance will decrease; if it falls below this percentage, the issuance rate will increase to encourage more stakers to contribute.
At the time of publication, the price of Solana was listed at US$221,23, up 3.9% in the last 24 hours.
Solana currently adopts a fixed issuance mechanism, which implies static staking rewards for validators, without considering the variations in the cryptocurrency market. The proposal introduces the idea of “smart emissions”, seeking to combine network security with efficient financial incentives. For Multicoin, this more flexible model can “systematically reduce selling pressure” as long as there is enough validators and participants joining.
According to the document, if the staking participation rate remains above 50%, the additional supply of $SOL would be reduced, reflecting a lower need for rewards to maintain the network’s security. Conversely, if the staking rate proves insufficient, issuance would increase to encourage new stakeholders to lock up their tokens, ensuring the robustness of the blockchain.
“Solana’s current issuance schedule is suboptimal given the level of activity and fees on the network, as it emits more SOL than is necessary to keep the network secure,” said Tushar Jain and Vishal Kankani, authors of the project. “The mechanism does not recognize network activity, nor does it factor it into determining the issuance rate.”
Today @kankanivishal and I released a Solana Improvement Proposal to reduce Solana inflation.
As Solana matures, stakers increasingly earn SOL through mechanisms like MEV. This income stream reduces the network's historical exclusive reliance on token emissions to attract stake…
— Tushar Jain (@TusharJain_) January 16, 2025
The idea also addresses the potential decline in staking yields, as variable issuance tends to adjust the reward supply. Still, this move could boost the token’s value, as “By aligning inflation adjustments with the actual deviation, network issuance better reflects the network's real-time economic and security conditions,” Jain and Kankani wrote. In scenarios of intense activity, Solana would burn part of the fees, which, combined with lower issuance, would increase the chances of approaching a deflationary model and, who knows, achieving “Ultra-Sound Money” status.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Sei Foundation launches $65 million DeSci venture fund 'Sapien Capital'
Sei Foundation has launched Sapien Capital, a $65 million venture fund to back DeSci startups building on its Layer 1 Sei blockchain.The foundation has fully committed the $65 million, with no external capital involved, Justin Barlow told The Block.
The Daily: Trump Media approves Truth.Fi launch and crypto investments, Robinhood teases bitcoin futures trading and more
Trump Media & Technology Group has launched a fintech venture called Truth.Fi, aiming to invest up to $250 million in bitcoin, similar cryptocurrencies or crypto-related securities, ETFs and other financial assets.Popular retail platform Robinhood teased the launch of bitcoin, ether, oil and gold futures trading on Wednesday alongside S&P 500, USD and EUR futures, facilitated by the CME Group.
Bitcoin Positioned for a Surge as Price Discovery Phase Progresses
Wall Street’s Growing Role Could Make Bitcoin Less Volatile