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ETH 
SOL Ethereum and Solana consider proposals to reduce token inflation
Ethereum and Solana are considering changes that could significantly reduce their annual token inflation rates and aim to slow future growth in ETH and SOL supply. Digital asset investment firm Grayscale reported that if the measures are approved and implemented by the respective communities, the proposed updates could make the two cryptocurrencies more scarce.
Token Supply Model Review
Both Ethereum and Solana play key roles in the decentralized finance (DeFi) ecosystem, supporting applications for stablecoins and tokenized assets. Their native tokens are traded globally, and as digital goods, their value changes with fluctuations in supply and demand.
Grayscale said the current proposal on each network aims to reduce the number of new tokens entering the system each year. If adopted, these changes could reduce the annual supply inflation rates for Ethereum and Bitcoin to approximately 0.4% by 2031, while Solana's ratio could fall to 1.1% over the same period. These figures assume that there are no additional changes to the token issuance or supply mechanism other than the proposal.
Bitcoin has become a well-known benchmark in the digital asset space due to its strict supply plan and low annual inflation and is suitable for comparison. Annual supply growth for gold is estimated at 1.8%, compared with the recent U.S. consumer price index (CPI) inflation rate of 3.3%. Both numbers exceed projected inflation levels for ETH and SOL, highlighting the potential impact of these agreement updates.
Comparison of inflation rates
Comparative data from Grayscale shows that Ethereum's expected annual inflation rate is 0.4%, Bitcoin is 0.4%, Solana is 1.1%, gold is 1.8%, and the U.S. CPI is 3.3%. All numbers are below gold and CPI levels.
Grayscale emphasized that reducing token issuance will not necessarily lead to an increase in ETH or SOL prices, as market demand remains an independent factor. However, the proposal is directly aimed at reducing future supply growth rates for both networks.
With the proposed changes, annual inflation rates in ETH and SOL could fall below gold and U.S. CPI levels, which could change the scarcity characteristics of these tokens over the next decade.
Possible impact on pledges and online rewards
The proposed supply reduction is still under discussion in the Ethereum and Solana communities. Grayscale's research shows that Solana's proposal currently appears to have wider support, which could increase the likelihood of its implementation.
Pledge rewards for both networks rely in part on new token issuance. Therefore, lowering the inflation rate will reduce the number of new tokens allocated to users who pledge assets to ensure blockchain operations. This adjustment may affect the return of pledge participants, who may receive fewer tokens even if prices rise due to increased scarcity.
For users who hold ETH and SOL but do not pledge, reduced supply growth may benefit them if the market responds to increased scarcity. However, pledgers need to rethink their risk and reward calculations under the new reward rate.
Grayscale described the proposed Ethereum update as technical, particularly changes around its pledge model, and noted that the impact will depend on how each online community ultimately votes.
The final decision is made by each network's governance body, which will determine whether these proposals permanently introduce protocol rules.
