Solana recently held a huge on-chain vote (SIMD-228) to slash its inflation rate by a whopping 80%. The results? A nail-biting defeat.
High Voter Turnout, Close Result
The vote, along with another proposal (SIMD-123 which did pass), saw record-breaking participation. Over 74% of eligible Solana stake participated in SIMD-228, a turnout Solana boasted was higher than any US presidential election in the last century! While SIMD-228 got a strong 61.39% “Yes” vote, it needed 66.67% to pass. It fell short.
Why the Split Decision? Differing Incentives
The disagreement boiled down to differing incentives among validators. Larger validators, who make money from transaction fees and other sources, largely supported the proposal. They believed lower inflation would boost SOL’s price in the long run.
Smaller validators, however, overwhelmingly voted “No.” They feared that a sharp drop in inflation would drastically reduce their staking rewards, potentially making it too expensive to operate. Reduced rewards could force them off the network.
Expert Opinions
Several experts weighed in:
- Ben Sparang (formerly Solana Foundation): Highlighted the stark difference between large and small validators’ voting patterns, emphasizing the profitability concerns for smaller players.
- Cyphereus Prime (X1 founder): Noted the positive long-term effects of reduced inflation on SOL’s tokenomics but also acknowledged the potential negative impact on smaller validators.
- Tushar Jain (Multicoin Capital): Celebrated the record-breaking participation as a testament to Solana’s strength and resilience, viewing the vote as a successful stress test of the network’s governance system.
The Future of Solana’s Inflation
Despite the failure of SIMD-228, the massive participation showed a strong, engaged community. While the immediate goal of reducing inflation was unsuccessful this time, the process itself highlighted the power of Solana’s on-chain governance and provided valuable insights for future proposals. At the time of writing, SOL was trading at $126.
