A big deal is happening! SOL has new moves recently! Something big is coming!
The Solana community has launched a new proposal SIMD - 0411, the core content is to double the inflation reduction rate, from the original -15% to -30%. Originally, SOL's inflation rate would only drop to 1.5% by 2032, but with the new proposal, it can be achieved by 2029.
Once this proposal was announced, it significantly reduced SOL's issuance over the next 6 years, decreasing it by 22.3 million. Earlier this year, the Solana community also proposed SIMD - 0228, aiming to create a dynamic inflation model, but it was directly rejected due to its complexity. This time, SIMD - 0411 learned from the lessons and only modified one parameter, making it simple, direct, and practical, a simplified and safer version of 0228.
Institutions and large holders unanimously support this proposal, as they believe that a faster reduction in inflation will provide more support for the coin price and also drive more activity in DeFi. SOL's data protocol revenue has increased fifty-fold in a year, and the DEX trading volume is 1.6 times that of Ethereum, which can be described as astonishing growth.
However, another group of small retail investors and small validator nodes is panicking because staking rewards are set to decrease. The staking reward in the first year is about 5%, dropping to 3.5% in the second year, and in the third year, it will only be 2.4%. Some analyses suggest that by the third year, as many as 47 small validator nodes may close due to losses, and if that happens, SOL's level of decentralization will definitely be affected.
However, SOL currently has substantial hard power support, with weekly net inflows into SOL's ETF reaching 128 million USD. The treasury company and ETF collectively hold 25.58 million SOL, valued at 3.55 billion USD, indicating that institutions are indeed buying in real money.
Whether this proposal can ultimately pass is still uncertain. Supporters believe this is a key turning point for SOL's economic development, while opponents worry it may harm the network's foundation. But in any case, SOL is now seriously reforming.
As for the follow-up developments? I will continue to track it, so stay tuned to avoid getting lost.
