Solana’s SIMD 228 inflation cut proposal fails, but ‘network passes key stress test’

• SIMD 228 proposal failed to pass, but SIMD 123 passed
• Solana insiders hailed the historic voting turnout for the proposal

Solana’s [SOL] most controversial inflation proposal, SIMD 228, didn’t pass after garnering just 43.6% YES votes, about 23% below the required threshold of 66.67%. 

According to Dune Analytics’ data, the final vote tally showed that 27.4% of stakeholders voted against the proposal to cut Solana’s inflation by 80%. 

Source: Dune

Mixed views on Solana’s vote

Despite the outcome, Solana insiders hailed the governance voting process. Notably, 74% of staked SOL voted on the proposal, alongside 910 validators.

This episode had the highest participation ever in a blockchain ecosystem, noted Tushar Jain, Co-founder of Multicoin Capital. Here, it’s worth noting that he’s the crypto VC behind the SIMD 228 proposal.

Jain added, 

“This was a meaningful scaling stress test—a social, rather than technical, stress test—and the network passed despite a wide stratification of diverging opinions and interests.”

In the run-up to the voting, the proposal attracted strong opposition and supporters in equal measure. Supporters argued that unnecessary, fixed inflation weighs SOL’s value, while opposers appeared uncomfortable with the potential cut on staking rewards. 

Surprisingly, another SIMD 123 proposal for validator reward distribution, voted alongside SIMD 228, passed. 

Even so, the divergent views remained even after the SIMD 228 vote. According to Solana co-founder Anatoly Yakavenko, opposition to SIMD 228 was acting beyond their ‘self-interest.’

“Simd 228 didn’t pass, but 123 passed. Even though both proposals were for reducing validator revenue. Opposition to 228 isn’t just acting in their own self-interest.”

The SIMD 228 would have introduced a mandatory revenue cut, unlike the flexibility of the SIMD 123. For his part, Helius Labs’ founder Mert Mumtaz, one of the SIMD 228 opposers and Solana validator operator, stated, 

“The one makes stakers more and the other makes stakers less”

Currently, Solana’s inflation stands at about 5%, while stakers enjoy annualized 8% rewards, according to Staking Rewards data. 

Source: Staking Rewards

According to simulation estimates, the SIMD 228 proposal would have slashed staker returns to 1.34% – An 80% reduction.

Now, Solana’s fixed inflation schedule, with an annual 15% deflationary rate until it hits a long-term 1.5% rate, will continue to be in place. 

Source: Helius

Meanwhile, SOL’s price was unmoved by the vote outcome at press time. It was valued at $125, and above the crucial $120-support zone.