Solana's inflation-cutting proposal passed the vote with 67% support

Solana's proposal to double the annual deflation rate passed the governance vote with 67% support

Solana's proposal to double the annual deflation rate passed the governance vote with 67% support, making the network expected to reduce SOL circulation by 18.9 million units over six years.

Core Points

67% of SOLs voting supported accelerating the deflation process, slightly exceeding the two-thirds threshold requirement.
60.7% of the qualified pledge amount participated in the voting, easily meeting the one-third quorum requirement.
SOL inflation will fall twice as fast, but retain the existing minimum interest rate of 1.5%.
Another resource cost proposal failed to pass because it received only 53.9% support.

Solana's inflation proposal passed with a narrow margin required votes

Solana's official governance dashboard shows that the SGP-0002 proposal called "Double Deflation" has been voted on, with a total of 176.29 million SOL votes in favor, accounting for 67% of the pledge. Another 66.19 million SOLs (25.16%) opposed the proposal, and 20.63 million SOLs (7.84%) abstained. The voting participation rate reached 60.7%, representing 433.49 million SOLs, exceeding the one-third quorum required by Solana governance rules.

According to Solana's governance process, the proposal is approved when at least one-third of the online pledges participate in the voting, and two-thirds of the pledges participating in the voting vote vote in favor. Abstentions are counted in both the participation rate and the total amount used to calculate support rates, leaving SGP-0002 just above the required 66.67% threshold.

Faster deflation still requires technology deployment

Although the governance dashboard marks SGP-0002 as finalized, as of the time of writing, SIMD-0550 is still in a "review" state in the Solana Foundation's improvement document library. The document's functional fields also do not show a completed implementation or activation schedule.

Before mainnet activation, the verifier client must add and support a feature switch called "double_deflation_rate". The technical document states that the feature will be activated at the boundaries of a certain era, and faster deflation rates will apply to rewards at the beginning of the next era.

According to SIMD-0550, developers designed this change to maintain circulation continuity when activated. Solana will re-anchor its inflation formula when activated to avoid immediate interest rates falling or retroactive adjustments to rewards already received.

Since inflation incentives affect Solana's bank capitalization and bank hashes, each validator client must calculate the new deflation rate in the same way. Differences between different implementations can cause nodes to arrive at conflicting network states, making the proposal a consensus-level change rather than a simple adjustment to validator settings.

The technical documentation states that this feature switch must be permanently retained in the client software so that nodes that replay Solana history can apply the correct inflation rate before and after activation. The rewards for completed eras will remain unchanged.

Solana had previously considered SIMD-0228, which would link emissions to pledge participation rates rather than following a fixed reduction plan. The proposal failed to reach a quorum in March 2025 due to concerns among verifiers and other participants about pledge revenue, verifier economics and model complexity.

SIMD-0550 uses a fixed schedule and is not adjusted with changes in pledge participation rates. The authors said the design would maintain a predictable inflation path while avoiding sudden reductions that could put direct pressure on verifier income.

Resource and cost proposal failed to achieve two-thirds support

In a Solana vote held simultaneously with SGP-0002, SGP-0003 (resource and fee inclusion proposal) failed despite a participation rate of 61.14%. The final vote count showed that the support rate was 53.9%, the opposition rate was 18.92%, and the abstention rate was 27.18%. As a result, the approval rate is nearly 13 percentage points below the two-thirds threshold.

SGP-0003 requires validators and principals to support SIMD-0553, which would replace Solana's current fixed base fee model with an inclusive fee of 2500 lamport and a separate charge based on resources requested per transaction. Verifiers will receive inclusive and priority fees, while the agreement will destroy all resource-based portions.

According to online documents, Solana currently charges a base fee of 5000 ramports per signature, half of which is destroyed and the other half is paid to the block production verifier. Priority fees are fully owned by the verifier.

The SIMD-0553 cost model proposes three resource cost stages. Based on network activity data for May 2026, the authors estimated that the daily destruction volume in the first phase was 1500 to 1800 SOLs, 3750 to 4500 SOLs in the second phase, and 7500 to 9000 SOLs in the third phase. Solana currently destroys approximately 648 SOLs per day at a fixed cost.

Even at the highest proposed rate, the document estimates that the increased destruction amounts to approximately 0.5% of annual supply, while inflation is approximately 3.8%. As a result, SIMD-0553 does not predict that the fee model itself will make SOL a net deflationary asset.

Transaction costs will also vary based on the requested network resources. The proposal estimates that a simple validator vote could cost 12.3%, while a zero-priority Pump.fun exchange used as an example could face a 3150% increase. Applications that set the calculation cap much higher than actual needs will pay more because the fee will be based on the requested resources rather than the amount ultimately consumed.

US-listed Solana products face lower pledge income

Opponents of both proposals include Nasdaq-listed digital asset finance company Solana Company (ticker symbol HSDT). In a statement on August 21, the company expressed support for reducing circulation and resource-based fees as long-term goals, but opposed changing two established economic parameters in Solana's first formal governance cycle.

The company said institutions rely on stable pledge yields and predictable transaction costs when preparing forecasts, audit reports and operating budgets. Solana Company stated that the pledge yield represents the operating cash flow of some token holders and believes that reopening established inflation schedules may create uncertainty for the institutions operating by the evaluation verifiers. The company also said variable fees will transfer estimated risks to users and operators before its systems are ready.

Joseph Chee, Chairman and CEO of Solana Company, said: "Institutional adoption is a key driver of Solana's growth, and organizations make decisions based on a consistent, predictable structure. "

Faster deflation may also affect U.S. investors holding pledge-based Solana products. According to a recent Bitwise Fund report, as of August 9, Bitwise Solana Staking ETF held 8.18 million SOLs worth approximately US$622 million, of which 99% of the assets were pledged, and the reported net pledge reward rate was 5.84%. Grayscale has separately planned quarterly pledge allocations for its Solana Staking ETF. Its filing said shareholder payments would depend on the incentives received by the fund, operating costs, management arrangements and applicable tax treatment.

While Solana is considering reducing its circulation path, network usage has climbed. According to the Internet activity report on August 25, transaction volume reached a record 4.2 billion in July, an increase of 13.5% from June and an increase of approximately 91% from December 2025. Blockworks data cited in the report also showed that there were 1.32 billion non-voting transactions between August 17 and August 23, the busiest seven-day cycle in the network's history.