Multicoin Capital proposed SIMD-0228, which is expected to transition the current token emission model of the Solana Network to a variable rate system. The proposal aims to reduce inflation.
SIMD-0228 It offers a market-oriented solution that fluctuates based on the mortgage participation rate, which is calculated by dividing the committed SOL amount.
Assuming the staking participation rate falls below the recommended target of 50%, new token issuance will increase to reward stakeholders and validators and secure the network.
Conversely, if the participation rate exceeds the target rate, the issuance of tokens is restricted, and the inflation rate is capped to limit the mintage rate of new tokens.
Token economy and inflation continue to challenge distributed cryptocurrency networks, sparking ongoing discussions about the best incentive models.
Solana auditors approve proposal to redirect priority fees
In the middle of last year, Solana validators voted to approve another proposal, SIMD-0096, which removed the 50% burn mechanism for validator priority fees across the network and allowed 100% of the fees to be allocated to block producers.
This proposal aims to improve incentives around how validators receive priority fees, which helps with network security. SIMD-0096 was expected to eliminate potential side trades between block producers and transaction providers, improving incentives within the validator system.
Original proposal male.
This ensures that auditors are appropriately incentivized to prioritize network security and efficiency, rather than being incentivized to engage in potentially harmful side deals..
SIMD-0096 an offer
Critics of the proposal warned that removing the protocol’s 50% fee burn mechanism to incentivize validators would raise SOL’s inflation rate. This inflation would benefit auditors. However, SOL holders who choose not to participate may experience the negative effects of inflation that erode their holdings.
Although the proposal received a 77% approval rate, SIMD-0096 has not yet been implemented on the Solana mainnet at the time of this writing.
65% of SOL is wagered, with Jito MEV rewards exceeding $100 million
Data from StakeRewards shows that approximately 65% of SOL’s circulating supply is currently staked.
Jito – a maximum extractable value (MEV) block building solution based on Solana – surpassed $100 million in tips in December 2024, providing an additional source of income for validators.
Advocates of Solana token emissions adjustment argue that validator rewards earned through the maximum extractable value are sufficient incentives for validators to secure the network.
According to proponents, these MEV-based incentives reduce the necessity of allocating 100% of priority fees to network validators and are better than the risk of increased SOL inflation.
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