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SOL Solana validators narrowly approved a proposal to double the deflation rate
Solana validators narrowly approved a proposal to double the annual deflation rate on the Internet. The proposal broke the two-thirds absolute majority threshold by just 0.33 percentage points, thanks to Kraken turning most of his pledge votes from no to yes in the final hours.
Reaching the circulation floor of 1.5% in 2.8 years
The SGP-0002 proposal (i.e."Double Deflation") was passed with a support rate of 67%, of which 25.16% opposed and 7.84% abstained. The voting participation rate accounted for 60.7% of eligible pledge rights. The support rating just exceeded the 66.67% threshold needed for the proposal to pass.
The final SGP-0002 vote count result captured on the Solana Verifier Governance Panel on August 29, 2026. Source: Solana Governance.
Both supply proposals were opposed by Kraken at 12:33 UTC on August 28. This left SGP-0002's support rating below the absolute majority, and less than three hours were left before the vote count deadline of 1024th Era at 15:00 UTC.
Earlier in the day, the support rating was 68.77%, and about 47.72% of eligible pledges had been voted. Kraken's no vote lowered support to about 65%.
Kraken then changed his position again. As of the end of the vote, the proposal had the support of more than 90% of the US exchange's approximately 8.9 million SOL voting rights.
The plan, linked to Proposal SIMD-0550, would double Solana's annual deflation rate from 15% to 30%, but maintain the network's long-term inflation target at 1.5%.
Following the original path, Solana would reach the terminal interest rate of 1.5% in about 5.7 years, but now this time has been shortened to about 2.8 years. This means that approximately 18.9 million SOL is expected to be reduced into circulation over the next six years.
The positive side is that the dilution of SOL holders will be reduced, but the negative side is that pledge rewards for validators and trustors will be reduced.
Figment invested 17.1 million SOL in all opposition to SGP-0002
Figment, which holds 17.1 million SOL in final governance data, voted against the proposal, while Helius and Jupiter voted in favor. Other major custodian pledgers opposed at least SGP-0002, including Everstake and P2P Validator.
Since custodian exchanges will be paid when new SOL issues, faster deflation means that annualized yields will fall faster and revenue will fall accordingly.
Helius CEO and co-author of the proposal Mert Mumtaz posted on the X platform that this logic is "mathematically meaningless." He said the price increase caused by slowing supply growth would be much higher than the savings.
Solana Company, which is listed on NASDAQ under the ticker symbol HSDT, said on August 21 that it supports the Solana Constitution but opposes two supply proposals. The company said recalibrating inflation plans would add uncertainty to the multi-year models used by agencies.
SGP-0002 is part of Solana's first binding governance process. Solana Constitution SGP-0001 was adopted with 85.97%.
SGP-0003 failed with a support rate of 53.90%. The fee adjustment under proposal SIMD-0553 would cause transactions to pay for the computing power they occupy and destroy part of the payment.
The rejection of this proposal means that the daily destruction volume of SOL will remain at approximately 650 SOL. In comparison, this cost adjustment would have produced destruction volumes of 7500 to 9000 SOL per day, or approximately $800,000 per day at current prices.
According to CoinGecko data, SOL traded at approximately US$104 that day, down approximately 5.2%.
Two rejected supply proposals can be resubmitted without any cooling-off period. But supporters must convince trustees who have publicly expressed opposition.
