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SOL 21Shares: Solana's two proposals may reshape the token issuance and destruction mechanism and reduce supply by approximately US$1.5 billion.
21Shares pointed out that proposals SIMD-550 and SIMD-553 are expected to change Solana's token issuance and destruction mechanism, reducing supply by up to approximately US$1.5 billion. Among them, SIMD-550 will double the annual deflation acceleration rate to 30%, pushing Solana to reach its final inflation target of 1.5% in the first half of 2029. SIMD-553, on the other hand, may increase the daily SOL destruction volume from 600 to 800 to 7,500 to 9,000 by charging a fee per request computing unit.
Solana proposal focuses on release and destruction mechanisms
According to 21Shares analysis, Solana is currently considering two governance changes aimed at adjusting the release and destruction methods of SOL. Proposal SIMD-550 was proposed by Helius and entered the voting stage on August 23. The proposal plans to increase the annual deflation acceleration rate from 15% to 30%, allowing Solana to reach a final inflation rate of 1.5% in the first half of 2029. Under the proposal, the pledge yield would fall to approximately 4.34% in the first year, then to 3% in the second year, and to 2.25% in the third year.
On August 24, Solana's pledge yield was approximately 5.25%. Of this, agreed inflation contributed approximately 3.78%, with the rest supplemented by transaction fees, tips and maximum extractable value (MEV).
SIMD-553 may increase daily SOL destruction
Another change, SIMD-553, was proposed by Temporal, Solana's research and development organization. The development team approved and merged the proposal on July 20, adding a cost destruction mechanism based on request computing units. 21Shares predicts that at current levels of network activity, the daily SOL destruction volume may increase from 600 to 800 to 7,500 to 9,000, worth approximately US$712,500 to US$855,000. However, current destruction levels still cannot fully offset inflation of approximately $4.5 million per day.
Together, the two proposals could reduce SOL issuance by US$1.4 billion to US$1.5 billion over six years. However, SIMD-553 still has an unresolved validator voting fee design issue. Verifier costs may increase slightly or reach approximately 21 times current levels.
Falling yields reshape the verifier economic model
21Shares estimates that under SIMD-550's predictions, as many as 2 of 738 verifiers may fall into a loss in the first year, and this number may increase to 30 in the third year. 21Shares pointed out that Solana's pledge ratio is 67.93%, while Ethereum's pledge ratio is 34.14%. Lower pledge returns could drive capital to decentralized finance (DeFi) and other on-chain uses. However, to make up for the lost pledge income, MEV and tips need to increase by approximately 55% to 95%. The final economic impact will depend on the voting results of the SIMD-550 and the validator fee design for the SIMD-553.
