Solana Validators Vote on Governance Proposals Aiming to Reduce SOL Issuance
Solana validators are currently voting on two governance proposals that could significantly impact the network's economic model. The proposals, known as SGP-0002 and SGP-0003, aim to reduce SOL issuance by up to $1.5 billion over six years.
SGP-0002 proposes doubling the annual rate of inflation reduction for SOL, effectively accelerating the schedule by which new tokens are introduced into circulation. Currently, Solana's inflation rate decreases by 15% each year, but under this proposal, that reduction would increase to 30% annually.
SGP-0003 focuses on the demand side by proposing that a portion of transaction fees be burned rather than distributed to validators. This mechanism is designed to offset some of the remaining issuance and could help stabilize or even reduce the total SOL supply over time.
According to 21Shares' analysis, if both proposals are adopted, staking yields could fall to about half their current level within two years. This is a significant consideration for the many SOL holders who participate in staking to earn passive income.