Solana’s New Proposal Slashes Inflation by 80%, But Critics Warn of Centralization

The Solana (SOL) community is set to vote on SIMD-0228. This governance proposal could cut the network’s annual inflation by up to 80%. The vote is scheduled for epoch 753, around March 6.

The proposal authored by Multicoin Capital’s Tushar Jain, Vishal Kankani, and Anza’s Lead Economist, Max Resnick, has sparked mixed reactions from the community.

SIMD-0228: A Bold Shift or a Risk to Solana’s Decentralization?

SIMD-0228 introduces dynamic, market-driven “smart emissions” instead of a fixed issuance schedule on Solana. The goal is to reduce inflation while ensuring network security by adjusting SOL emissions based on staking participation. 

If staking is high, emissions decrease. Conversely, emissions would rise if staking participation drops.

“Given Solana’s thriving economic activity, it makes sense to evolve the network’s monetary policy with “smart emissions,” Jain wrote on X.

A target staking rate of 50% is proposed. Inflation is capped at 1.5% and a lower bound of 0%. This model minimizes sell pressure, enhances sustainability, and aligns rewards with network needs. 

As Maximal Extractable Value (MEV) earnings grow, the proposal envisions a future without SOL emissions, making SOL scarcer and potentially more valuable in the long term. 

Notably, Solana co-founder Anatoly Yakovenko has voiced strong support for SIMD-0228.

“We have a chance to correct the mistakes of our youth,” he said.

Mert Mumtaz, CEO of Helius Labs, has also weighed in on the ongoing debate surrounding SIMD-228.

“I think SIMD 228 should pass because I believe it makes the network stronger,” he posted.

He added that even if the proposal does not pass, it is encouraging to see strong public discussions from both sides that remain solution-oriented.

“SIMD-0228 is important because it could reshape Solana’s tokenomics, affect staking incentives, and signal how the ecosystem adapts to growth and market pressures,” analyst Marty Party stated on X.

Nonetheless, the proposal has also raised concerns. Matthew Sigel, Head of Digital Assets Research at VanEck, has highlighted the potential impact of SIMD-0228, along with two other major Solana proposals—SIMD-096 and SIMD-0123—on validator revenues and decentralization.

“Some estimates suggest validator earnings could decrease by as much as 95%, making operations unsustainable for smaller validators,” he noted.

Sigel highlighted the financial challenges of running a Solana validator, noting that fixed costs include $58,000 per year in voting fees and $6,000 in hardware expenses. Of Solana’s 1,323 validators, only 458 have enough stake (over 100,000 SOL) to remain profitable.

“If smaller validators shut down, the network may become more centralized around large institutional entities such as Coinbase and Binance,” Sigel remarked.

Sigel’s concerns align with those of Solana community members, who fear SIMD-0228 favors large stakers and threatens decentralization.

“This proposal will likely have disastrous effects on the confidence of Solana when needed most,” claimed one user.

Despite the concerns, Sigel acknowledged that reducing inflation could strengthen Solana’s long-term sustainability by minimizing token dilution and sell pressure.