Solana (SOL) Proposes New Inflation Reduction Plan with SIMD-0411

Solana’s latest proposal, SIMD-0411, seeks to address concerns over the blockchain’s inflation schedule by doubling the disinflation rate from 15% to 30%. This comes after the prior proposal, SIMD-0228, was rejected in March 2025. If approved, this new adjustment could significantly impact validator economics and SOL emissions, according to galaxy.com.

Background on Solana’s Inflation

Solana’s inflation mechanism initially increased the supply of SOL tokens by 8% in the first year, with a planned annual reduction of 15% until reaching a terminal rate of 1.5%. Currently, the inflation rate is approximately 4.18%, with a target to reach the terminal rate by 2032. The proposed changes in SIMD-0411 could halve the time needed to achieve this goal, potentially reaching it in just over three years.

Details of SIMD-0411

The proposed increase in the disinflation rate aims to reduce SOL emissions over the next six years by 22.3 million tokens, which translates to a 3.2% decrease from the current expectation. This reduction in emissions would equate to approximately $2.9 billion, based on the current SOL price of $130. The proposal does not alter the terminal inflation target of 1.5%, maintaining a consistent rate for validators to plan accordingly.

Impact on Validators

With the proposed changes, nominal staking yields for validators are expected to decrease gradually. Assuming the percentage of SOL staked remains steady, yields could drop from the current 6.4% to about 5.0% in the first year, then further to 3.5% and 2.4% over the next two years. This could particularly affect smaller validators reliant on inflationary rewards, with an estimated 5% of Solana’s active validators becoming unprofitable over the next three years.

Community and Governance

The proposal is currently under community review, with discussions taking place across various platforms. A stake-weighted onchain vote will be required for approval, with voting power proportional to delegated stake. The voting process is anticipated to last between four to seven days, aiming for a simple majority approval. If passed, the proposal’s changes are expected to be implemented by mid-2026, following the activation of the Alpenglow consensus upgrade.

Broader Implications

Proponents of the proposal argue that reducing SOL emissions could decrease sell pressure and enhance DeFi activity on the Solana network by lowering the opportunity cost of not staking SOL. However, critics suggest that lower staking yields may deter institutional and retail investors, potentially affecting network decentralization and security.

Overall, SIMD-0411 represents a strategic effort by Solana to refine its inflation strategy and strengthen its economic framework, crucial as the blockchain faces increasing competition from other high-performance networks. The outcome of this proposal will be a key indicator of Solana’s direction in the evolving crypto landscape.

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