Solana Validators Vote on “SIMD-228” Proposal for Inflation Adjustment

Solana Validators Vote on SIMD-228 Proposal for Inflation Adjustment

In Solana (SOL), validators are currently voting on a proposal to reduce inflation. According to the background, the current measure of 1.5 percent inflation should be reduced to 0.5 percent in the annual calculation.

Up to now, Solana followed the plan that the inflation compensation of the SOL tokens in circulation should permanently turn out to be 1.5 percent annually. However, observations of comparable blockchains such as Ethereum or Bitcoin show that there, often significantly lower values are achieved. Solana has held an internal discussion on Twitter for some time about whether lower inflation would be an attractive measure to enhance Solana’s competitiveness.

Now the proposal SIMD-228 on this topic has been introduced for voting among the validators. Simultaneously, an FAQ explaining the background and possible consequences has been published. Simd Initiative for 0.5 percent inflation

The new proposal was named SIMD-228 because of its technical internal impact. so that it does not exceed 0.5 percent at the annual level.

Solana Foundation points out that this process could take years. This gradual reduction in inflation provides time to observe the reactions in the ecosystem and make adjustments to the staking rewards model if necessary.

For Validators and Stakers

In practical terms, SIMD-228 would mainly affect validators and stakers, who receive their rewards in the form of SOL through stake reward. However, Solana’s approach is also met with skepticism, as lower inflation rates could also reduce the profitability of staking compared to other cryptocurrencies, for example. This debate could also influence voting, as some stakeholders would prefer higher staking returns. Potential improvement for sol as a global currency

Despite these differences, a reduction in Solana’s annual inflation rate from 1.5 to 0.5 percent might increase the attractiveness and attention of the crypto-scene. The lower inflation rate could enhance blockchain acceptance as a tool for international financing processes. The voting on SIMD-228 is scheduled to run until around October 28, 2023.