Ethereum and Solana Consider Token Supply Overhauls Amid Security Concerns
Two major blockchain networks, Ethereum and Solana, are considering significant changes to their token supply and inflation policies. According to research firm Galaxy Research, both networks face a fundamental question: how to balance the incentive budget needed for blockchain security with long-term pressure on token supply.
Ethereum's proposed change involves EIP-8361, or 'Tapered Issuance Burn,' which would burn an increasing portion of validator rewards as more ETH is staked. If 50% of the total ETH supply is staked, 100% of validator rewards would be burned, eliminating economic incentives to stake new ETH above that level.
Galaxy Research notes that this proposal could reduce the annual yield on Ethereum's consensus layer from approximately 2.6% to 1.2%. However, some prominent figures in the DeFi and staking communities argue that a sharp drop in staking yields would put pressure on individual validators, harm Ethereum's DeFi ecosystem, and reduce institutional investor demand.
Solana is also considering changes, with two separate proposals progressing through its on-chain governance system. Proposal SIMD-0550 aims to increase Solana's annual disinflation rate from 15% to 30%, while SIMD-0553 would change the transaction fee system to vary according to computational resources required for transactions.
Galaxy Research emphasizes that these changes are not yet set in stone, with voting and discussion periods still ahead. The research firm notes that supply-side regulations can help create strong narratives but are not the main constraint on ETH or SOL pricing. Improving technology infrastructure and increasing enterprise adoption should remain a priority for both networks.