Solana Proposals Could Slash $1.5B from SOL Supply in Six Years

Two governance proposals, SIMD-550 and SIMD-553, could significantly alter Solana's (SOL) issuance and burn mechanics. The changes aim to reduce SOL supply by up to $1.5 billion over six years.

SIMD-550, submitted by Helius, would double annual disinflation from 15% to 30%. This would move Solana towards its terminal inflation target of 1.5% by the first half of 2029. The proposal would also see staking yield decrease over time: from around 4.34% in year one to 3% in year two and 2.25% in year three.

SIMD-553, proposed by Temporal, introduces a burn fee tied to requested compute units. At current network activity, daily SOL burns could rise from 600-800 SOL to 7,500-9,000 SOL. This would equal approximately $712,500 to $855,000 in daily burns.

Together, the proposals could reduce SOL issuance by $1.4 billion to $1.5 billion over six years. However, it's worth noting that lower staking returns may redirect capital towards DeFi and other on-chain uses. For this to happen, MEV (maximal extractable value) and tips would need to increase by around 55% to 95%.