A New Solana Proposal Aims to Change Token Generation Frequency
A new Solana proposal aims to change the frequency at which new tokens are generated on the prominent blockchain—and the suggested changes are generating serious debate ahead of the imminent vote.
The proposal, also known as SIMD-0228, looks to move from fixed-rate token emissions to a programmatic, “market-based emission” schedule that is based on staking participation rate.
In other words, instead of decreasing Solana inflation based on a fixed, time-based schedule, SIMD-0228 proposes that Solana inflation dynamically changes based on network activity.
“The [current] mechanism is not aware of network activity, nor does it incorporate that to determine the emission rate. Simply put, it’s ‘dumb emissions,’” reads the proposal. “Given Solana’s thriving economic activity, it makes sense to evolve the network’s monetary policy with ‘smart emissions.’”
The proposal’s authors—Multicoin Capital’s Tushar Jain and Vishal Kankani, and Max Resnick, lead economist at Solana-focused R&D firm Anza—believe that so-called smart emissions would benefit the network and stakers by reducing inflation, spurring DeFi usage, reducing sell pressure, and improving the narrative around its existing inflation.
Notable Solana builders and personalities, including Solana Labs co-founder Anatoly Yakovenko, have signaled support for the proposal as well.
“The counter arguments to 228 are pretty bad because the cost of inflation is something on the order of […] $1-2 billion per year,” Yakovenko posted on X (formerly Twitter).
Helius Labs CEO Mert Mumtaz added that the “strongest argument for 228 is that it incentivizes and speeds up the timeline towards a network centered on real economic value.” That line of thinking was echoed by Placeholder VC partner Chris Burniske as well.
“I’m in favor of SIMD-228,” Burniske said on X. “In the long run, real yield comes from what the demand-side leaks to the supply-side, and inflation is just a bootstrapping mechanism to get to that place.”
But not all of the Solana community is ready to accept the proposal, which has been modified in the last two months based on feedback. As the proposal inches closer to a vote, some builders have taken aim at elements they believe will negatively impact the ecosystem.
One such dissenting opinion comes from SolBlaze.org, a Solana network validator that will have the option to vote on the proposal.
The validator added that the goal of lowering inflation “sounds good in theory,” but is a “terrible idea,” citing that SIMD-0228 will “drastically decrease” the amount of Solana tokens staked. Given that view, they believe it will threaten decentralization and the security of the network while impacting Solana’s DeFi protocols, which rely on staking rewards.
“DeFi is what powers Solana adoption, and regular users should care about that if they want Solana to succeed,” a SolBlaze representative told Decrypt when asked why the average Solana participant should care about SIMD-0228.
Others, including Solana Foundation President Lily Liu, have spoken out against the proposal.
“[SIMD-0228] is too, too half-baked,” posted Liu. She signaled support for fixed rates, which she called “not dumb and arbitrary,” citing that predictability is valuable in capital markets.
“No on the proposal before us,” she said, instead suggesting an extension so the proposal can be adjusted to incorporate other features.
Voting on SIMD-0228 is expected to start Friday evening during Solana Epoch 753, which is estimated to arrive around 8:30pm ET according to time tracking from Solscan. SolBlaze expects a “close vote” and is using the remaining hours to whip up support against the bill.
“Since it needs two-thirds of the vote to pass,” they told Decrypt, “there’s still a chance that enough people can come together to stop the proposal.”
Edited by Andrew Hayward