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SOL Solana's vote will reduce SOL issuance by 18.9 million, affecting pledgers
Solana has initiated an on-chain vote on SGP-0002 to submit token issuance changes to verifiers and pledgers. The proposal would double the annual deflation rate from 15% to 30%, accelerating the decline in new SOL circulation, but would not change the Internet's 1.5% inflation floor.
This vote was conducted under Solana's new pledge weight governance framework, and verifiers and native pledgers voted to express their support or opposition. The consignor can override the choice of its verifier, allowing the pledger to directly participate in the result. As a result, this decision combined monetary policy with early governance tests.
Solana vote will reduce SOL circulation by 18.9 million, affecting pledgers
SGP-0002 is associated with SIMD-0550, co-written by Lostin and Helius's 0xIchigo. Their June model showed inflation at 3.82% under the current plan. Based on the current annual deflation rate of 15%, inflation will fall to about 3.24% a year later and will reach the lower limit of 1.5% around the first half of 2032.
However, the proposed 30% deflation rate will accelerate this process. Inflation will fall to about 2.86% in a year and will reach the same floor around the beginning of 2029. This acceleration will reduce cumulative circulation. The model predicts total supply of 708.54 million SOL six years later, compared with 727.43 million SOL under the current plan.
The difference of 18.9 million tokens represents approximately 2.6% of the forecast supply. Based on US$95.70 per SOL on August 23, this amount is worth approximately US$1.81 billion. However, the proposal does not immediately halve the inflation rate, but only doubles the rate at which inflation falls to a constant long-term lower bound.
Reduced circulation will also reduce pledge rewards. Assuming a pledge participation rate of 68%, the nominal rate of return will drop from about 5.84% now to 4.34% a year later. The model then set the pledge yield at approximately 3.00% after two years and 2.25% after three years. These figures do not include commissions, MEVs and block-related revenue.
The financial situation of the verifier will also gradually weaken. Among the 738 validators, two additional operators became unprofitable or turned from breakeven to a loss after a year. The number increased to 13 two years later and to 30 three years later. However, the authors believe that the overall validator impact is relatively limited.
Falling pledge yields put the verifier's financial situation into focus
These economic changes have sparked institutional opposition. Nasdaq-listed Solana said on August 21 that it would vote against SGP-0002. The company supports reducing circulation as a long-term goal, but believes that changing established economic models during the first governance cycle may reduce the predictability of institutions.
This vote was also held after the failure of the 2025 SIMD-228 debate. The proposal had sought to dynamically adjust issuance based on pledge participation rates rather than existing fixed plans. About 74% of pledge SOLs participated in the vote, but only 61.4% of non-abstention votes supported the proposal, below the required two-thirds threshold.
According to the new SGP process, at least one-third of the network pledges need to participate in the voting, and two-thirds of the voting need to vote in favor to pass. Therefore, SGP-0002 raises two questions to the network: one is how fast the SOL dilution rate should decrease, and the other is whether governance can produce decisive consensus.
