The surprising outcome of the blockchain network reform vote has dealt a significant blow to some of Solana’s most influential leaders and investors. They aimed to replace Solana’s static inflation mechanics with a market-based system, likely decreasing the network’s 4.7% annual staking rewards to 1% or less. However, the opposition rallied their forces and the late-voting validators’ ballots tipped the scale, resulting in a striking defeat for the supporters of the SIMD-0228 reform.
This result shut down the first major attempt to reduce Solana’s unusually high staking emissions rate. Solana, one of the most valuable programmable blockchains by market cap, offers large sums of new tokens to its validators, the computer operations that power proof-of-stake blockchains.
The weeklong debate over SIMD-0228 bore a striking resemblance to a U.S. election night, complete with betting, rampant speculation, intricate data threads, in-depth chart analysis, endless social media debates, and more than a fair share of heated verbal sparring. Validators demonstrated their commitment to the process, with some even offering their votes for sale while others divided their tickets.
The drama culminated in an impressive rush of ballots cast by many of Solana’s 1300 validators. The opposition claimed victory in an election that saw remarkably high turnout and exposed the divide between large and small validators. Ultimately, SIMD-0228 became the first economic reform to fail in Solana’s voting history.
Solana validators are only required to vote when the network faces significant economic changes, according to Jonny, operator of the Solana Compass validator. SIMD-0228, the third vote of its kind recorded by StakingFacilities.com, sparked the highest turnout vote in the network’s history. Over 66% of validators cast votes, wielding 75% of the network’s voting power, a notable share considering that voting in this decentralized system is voluntary.
Interestingly, the voting pattern diverged based on the size of the validators. Over 60% of participating validators with 500,000 SOL or less voted against SIMD-0228. In contrast, among those with more than 500,000 SOL, 60% voted in favor. This discrepancy implies that smaller validators were significantly swayed by the opponents’ warnings of potential economic disaster.
Advocates of SIMD-0228 argued that the reform would address Solana’s inflation issue, which they claimed was negatively impacting SOL’s price. Their rationale suggested that fewer tokens would lead to fewer sellers and fewer tokens in the hands of tax collectors.
Despite these arguments, opponents considered the proposal hasty and imprudent. Some suspected that its co-author, the influential investment company Multicoin Capital, had written it to favor its own interests. Others warned that SIMD-0228 might disrupt elements of Solana’s DeFi economy or dissuade institutional investors attracted to SOL’s native yield.
Solana validators earn money based on the amount of SOL they’ve staked, either from their own funds or from tokens delegated to them by others. Validators with smaller stakes are more exposed to changes in emissions than those with larger stakes.
“Many people feel like SIMD-0228 is not the best proposal to address inflation on Solana,” said SolBlaze, a validator operator. “SIMD-0228 is a significant economic change, and changes on this scale deserve more time to discuss, analyze data, and iterate with feedback from different sectors of the ecosystem.”
