The SIMD-228 proposal aimed at reducing SOL inflation by 80% has so far received 35.7% support from Solana Balidators.
According to data from Dune Analytics, 701 of the 1,327 Active Solana (SOL) Validators voted. 1.2% abstained, 17.2% opposed the proposal, and 37.5% agreed. If SIMD-228 is approved, it will significantly reduce staking rewards and reduce the amount of fresh sol tokens that enter the circulation.
Despite the potential to reduce sales pressure, there have been some concerns as to how this will affect network decentralization. Currently, Solana's inflation model relies on balancing trading fee burning with staking rewards.
More charges will be burned during heavy network traffic periods, helping to combat inflation. However, as transaction costs decrease, fewer tokens are removed from the circulation. Staking incentives continue to add new SOL supplies at an inflation rate of 6.8%. This could potentially lower prices.
SIMD-228 will reduce staking rewards, reduce supply and perhaps increase the value of SOL. However, small validators with low fees or no committees can be hard to maintain profitability and even be kicked out.
A sufficient validator leaves the network decentralization can weaken, which raises questions about its long-term viability. Before choosing SIMD-228, the Solana developers looked into many options, including options with fixed fee adjustments.
Meanwhile, Solana's market performance has been poor over the past few weeks. As of March 13th, Sol was trading at $126, down more than 50% from its January peak of $293. Decentralized financial activity is declining, as we see the total value of the network, which fell from $12 billion in January to $7 billion, according to data from Defillama.
Monthly fees also fell sharply, especially due to low network usage, especially as Memecoin transactions fell to $89 million in February, from $250 million in January.
If SIMD-228 is approved, supply pressures could drop, but its success depends on growing network demand. Simply reducing inflation alone may not be enough to drive a strong recovery in the absence of more users and activity.
