Solana Tackles Tokenomics in Governance Proposals

Solana is taking steps to reduce its coin supply through two governance proposals. The proposals aim to slow new issuance and burn more of Solana's coins with each transaction, which could benefit holders but harm validators who process transactions and earn newly issued coins.

The first proposal, SGP-0002, would double the annual disinflation rate to 30% from 15%, pulling the 1.5% inflation floor forward to 2029 from 2032. The second proposal, SGP-0003, would burn transaction fees in full, lifting daily coin destruction from 648 SOL to 9,000 SOL against roughly 60,000 SOL issued daily.

Validators with under 500,000 SOL voted no in force last time a similar proposal was put forward, and it's unclear if smaller validators will support these proposals this time around. The authors of the proposals model staking yields falling from 5.8% today to 2.2% by year three, which could discourage institutions from holding Solana.