Solana Proposals Seek to Cut $1.4B in SOL Issuance and Halve Staking Yield

Solana's proposed governance changes could significantly impact its supply and staking economics. Two proposals, SIMD-550 and SIMD-553, are advancing toward formal votes, which could cut SOL issuance by $1.4 billion to $1.5 billion over six years. According to 21Shares' analysis, these changes would also halve staking yield within two years.

SIMD-550 targets protocol inflation, the largest source of Solana's roughly 5.25% staking yield as of August 24. It would double the network's annual disinflation rate from -15% to -30%, pulling the timeline to Solana's 1.5% terminal inflation rate from roughly 5.7 years to 2.8 years, reaching that level by H1 2029 instead of H1 2032.

21Shares projects nominal staking yield would fall to about 4.34% in year one, 3% in year two, and 2.25% in year three. SIMD-553 adds a burn fee on requested compute units from financial activity; at current network activity, daily burns would rise from about 600 to 800 SOL to roughly 7,500 to 9,000 SOL, worth $712,500 to $855,000 as of August 24.

The yield compression is direct: staking income scales with nominal yield, so a decline from roughly 6% to 3% would about halve staking revenue per unit of staked SOL. Solana's staking ratio sits near 67.93%, almost double Ethereum's 34.14%, and the proposals are partly designed to push capital out of staking and into the wider Solana economy.

Neither outcome is settled. SIMD-553's validator voting-fee design remains unresolved, with costs that could rise modestly or by as much as 21 times, squeezing validator profitability just as SIMD-550 trims their yield. Under SIMD-550's projections, an estimated two of 738 validators turn unprofitable in year one, rising to 30 by year three.