Solana could change how new coins are printed – But not everyone agrees

• Galaxy has submitted a new inflation proposal for Solana. 
• The proposal, like SIMD-228, elicited mixed reactions from key players. 

After stakeholders rejected Solana’s [SOL] 80% inflation cut proposal via SIMD-228 in March, Galaxy has floated another approach. Per the firm, the new inflation model would be ‘market-based’ to set SOL’s future inflation. 

“We just introduced a new Solana proposal called Multiple Election Stake-Weight Aggregation (MESA) to reduce SOL inflation: a more market-based approach to agreeing on the rate of future SOL emissions.”

The proposal would allow validators (node operators who stake SOL to ensure security and block production) to vote periodically (multiple deflation rates) and settle on the median vote outcome.

The averaged outcome (deflation rate) would then be adopted.

SOL inflation issue

However, the proposal differs from SIMD-228 in two ways. First, SIMD-228 was a single, one-off vote, while Galaxy’s approach consisted of several votes to get a median number.

In addition, SIMD-228 was dynamic based on staking demand. On the contrary, Galaxy’s MESA eyes a fixed deflationary curve. 

Reacting to the proposal, Tushair Jain, co-founder of MultiCoin Capital, the firm behind the rejected SIMD-228, highlighted key issues with the approach.

According to Jain, the proposal could easily be exploited, increase the ‘governance burden’ to stakeholders, and doesn’t address staking demand. 

‘It increases the governance burden on stakers who might not want to incur this cognitive load of deciding what inflation rate to vote for every epoch. A one-time vote is much easier for most stakers to participate in.’

In addition, some suggested that the approach would introduce uncertainty and sideline investors. 

For his part, Anatoly Yakavenko termed the proposal as ‘cool’ and suggested it should be median-stake weighted. 

Currently, Solana seeks a long-term inflation rate of 1.5%, which now stands at 5% per year (token issuance). It aims to achieve this through a fixed 15% annual disinflationary curve. 

Critics have argued that high inflation devalues SOL due to increased supply. However, creating a new inflation schedule has remained elusive after last month’s rejection of SIMD-228. 

Whether the latest proposal will gain consensus amongst key players remains to be seen.

In the meantime, whale positions increased on the altcoin, as seen by the green bars on the Whale vs. Retail Delta indicator. A move towards $150 could be feasible if whales increased exposure on SOL.