Solana Community Not In Favor Of 80% Inflation Reduction

Nevertheless, network members are calling it a victory for decentralized governance.

The vote on SIMD-228 was 74% of the steaking pooland 910 validators. However, only 43.6% of the votessupported the proposal, while 27.4% opposed it, and 3.3% abstained. Approval required 66.67% of the votes, but only 61.4% could be obtained.

Jain noted that it was the largest vote in crypto history - with a record number of participants and market capitalization of voters.

The Solana team says turnout at the polls was higher than in every U.S. presidential election in the past 100 years.

What Was Suggested To Change

SIMD-228 suggested a shift from fixed Solana inflation to dynamicstaking-level-dependent inflation. Instead of a planned reduction in issuance, the new mechanism would automatically adjust inflation based on validator activity.

Now annual SOL inflation starts at 8%and decreases by 15% from the current value each year, until it reaches 1.5%. The new mechanism could reduce this by 80%, which would significantly reduce the volume of new tokens issued.

At the moment, inflation is 4.66% but there is 3% of the total supplyin steaking. High inflation can exacerbate selling pressure, reduce the price of SOL and discourage users.

The proposed system was supposed to stabilize the network and limit unnecessary token issuance. However, the community did not support this option.

According to Helius, the proposed system could strengthen network securityas inflation would automatically increase when the proportion of steaking decreases. This would allow flexibility to respond to the actual level of steaking rather than following a rigid schedule, and would support the active use of SOL in DeFi.

However, the model had drawbacks. Less inflation could make it more difficult for small validators to operate, and the complicated structure could lead to instability with abrupt changes in steaking.

How Did Solana React?

The price of SOL was almost unchanged, down just 1.5% overnight to $125. However, over the past two months collapsed by nearly 60% the memcoin boom is over, and network revenues fell by more than 90%.

Why Are The Markets Falling?

On March 10, the Nasdaq collapsed 4%, posting its worst daily performance since 2022. Tesla shares plummeted by 15%, and other companies on the Magnificent Seven list suffered along with them. This caused a wave of sell-offs, which increased market turbulence.

At the same time, corporate bonds remain stable. Panic affected only the stock market. Tom Lee attributes this to the fact that investors overreacted to the consequences of Trump's trade war.

Is Fed Preparing To Cut Rates?

Lee points out that the bond market is already putting a ”Fed put” in prices.

”Fed put” is the expectation that in case of a sharp market decline, the Fed will intervene and reduce rates.

According to the analyst, inflation pressure is easing, which means that the regulator has room to start the easing cycle.

He also admits the possibility of a ”White House put” - a potential intervention by the Trump administration. So far, however, the White House has made no such announcement.

Is a recession on the horizon?

While Lee expects support from the Fed, he doesn't rule out the risk of a recession.

Meanwhile, the market continues to fall:

• The Nasdaq Composite remains under pressure, trading at 17,406.
• The S&P 500 records its worst week since 2024 and stands at 5,557.
• The Dow Jones is also in negative territory, dropping to 41,063.