Solana Validators Vote on Supply Reduction Proposals Worth Up to $1.5 Billion

Solana validators are currently voting on two governance proposals that aim to reduce the network’s future token supply. Together, the measures could lower projected SOL emissions by roughly $1.4 billion to $1.5 billion over the next six years.

What the Proposals Entail

SGP‑0002 (SIMD‑0550) would increase the disinflation rate, doubling the annual rate from –15 % to –30 %. This would compress the timeline to reach Solana’s 1.5 % terminal inflation from about 5.7 years to 2.8 years, targeting H1 2029 instead of H1 2032. The change would reduce the nominal staking yield to around 4.34 % in the first year, then to 3 % in year two and 2.25 % in year three.

SGP‑0003 (SIMD‑0553) would split the current 5,000‑lamport signature fee into a 2,500‑lamport base inclusion fee and a variable resource fee that is burned. At current activity levels, daily SOL burns could rise from roughly 600‑800 SOL to 7,500‑9,000 SOL (about $712,500‑$855,000), though this would not fully offset the network’s inflation of roughly $4.5 million per day.

Potential Market Impact

21Shares notes that the combined effect of the proposals could roughly halve staking yields within two years and make SOL “structurally scarcer.” Historical comparisons include:

• Cosmos (ATOM) reduced its maximum inflation in November 2023, followed by a 25 % price gain in one month and 10 % over three months.
• Ethereum’s EIP‑1559 burn mechanism introduced in August 2021 saw ETH rise 37 % in one month and 60 % over three months.

Both cases suggest that supply‑reduction upgrades can bolster a token’s narrative, but broader market conditions often play a larger role in price movements.

Current Price Context

SOL is trading near $101, having gained close to 20 % over the past week, a move attributed more to a general market rally than to the governance vote itself. Approval of the proposals would still require further technical work and activation on mainnet, leaving uncertainty about timing and ultimate price effects.