Solana Community Rejects Inflation Overhaul While Backing Staking Rewards Reform

• SIMD-228 failed, securing only 61.4% YES votes, below the 66.67% threshold.
• SIMD-123 passed, allowing validators to share revenue with stakers on-chain.
• Record voter turnout of 74%, the highest for any crypto governance vote.

Solana’s community just made two big decisions about the network’s future – and they have significant implications for SOL holders. A proposal to slash Solana’s inflation rate (SIMD-228) failed, while a plan to share revenue with validators (SIMD-123) passed. 

The vote, with 74.3% of Solana’s total stake participating, marked the highest engagement in Solana’s governance history – surpassing even U.S. presidential elections turnout in the past 100 years, as proudly noted by Solana on X.

Inflation Cut Rejected: What It Means

SIMD-228 aimed to ditch Solana’s fixed inflation schedule for a market-driven system, adjusting token issuance based on staking participation. 

The goal was to reduce Solana’s inflation rate to below 1% annually at the current staking rate of 65%. This contrasts with the existing fixed schedule of 4.6% annually, decreasing to 1.5% over time.

Supporters argued that reducing inflation would make SOL scarcer and more valuable, benefiting long-term holders. However, opponents expressed concerns that it could negatively impact smaller stakers and validators who rely on staking rewards for profitability.

Related: Solana Co-Founder Anatoly Yakovenko: Trump’s Crypto Order a “Scalpel” Cutting Through Regulatory Uncertainty

The vote began on March 6 during Solana Epoch 753 and concluded at the end of Epoch 755. It needed 66.67% approval to pass, but fell short with only 61.4% YES votes.

“So issuance will stay the way it is,” said Mert Mumtaz, CEO of Solana developer platform Helius Labs.

Related: Solana Revenue Tanks 93%: Meme Coin Market Freefall—Network Earnings Suffer

Tushar Jain, co-author of SIMD-228 and co-founder of Multicoin Capital, described the vote as a milestone for crypto governance, calling it the largest governance vote ever in terms of participant count and market cap involvement.

Validator Rewards Boosted: A New Revenue-Sharing Model

While SIMD-228 failed, SIMD-123 passed with nearly 75% approval. The proposal introduces an on-chain mechanism for validators to share a portion of their revenue with stakers. 

This means validators will now have a standardized way to reward those who stake their SOL with them. Currently, some validators use off-chain methods to incentivize stakers. The new system aims to make this process more transparent and efficient, directly on-chain.
In his remark, Solana Labs co-founder Anatoly Yakovenko suggested that opposition to SIMD-228 was not purely self-serving.