Author: Danny @IOSG

The SIMD 0228 proposal, an important decision that recently stirred the hearts of all participants in the Solana ecosystem, ultimately did not pass. The voter participation rate reached a historic high for Solana (close to 50% of the total token supply), but the proportion of supporting votes was insufficient to meet the supermajority threshold required for passage (66.67%).

The background of this proposal is that Solana is gradually transitioning from the on-chain frenzy brought about by Memecoins after the launch of Trump’s token. The weekly trading volume has retreated from nearly $100 billion at the beginning of the year to no more than $10 billion, a 90% decline, which is now below the trading volume during the early rise of Memecoins.

Alongside Memecoins, Solana became the most successful public chain of this cycle. As the Memecoin cycle gradually wanes, Solana also faces a transformation and a need to redefine its positioning. It was at this time that Solana's largest capital supporter—Multicoin—proposed the 0228 proposal. The proposal sparked intense debate within the community. Twitter became the main battleground, with different stakeholders arguing their points until the very last moment of voting.

During the debate process of the proposal, we could see many echoes of previous changes pushed within the Ethereum community. The window for the proposal itself was short, presenting many long-term considerations and short-term solutions, and of course, there were also many interests that were not easy to articulate. However, its transparency allowed us to see the current attitudes and strategies of many Solana leaders.

Despite the proposal being rejected, Tushar from Multicoin, the proposer, still referred to it as "a victory," citing the high voter participation rate and extensive community discussion as evidence of Solana's decentralized governance capabilities.

Who is actually playing the game behind this proposal governance in Solana? What does it mean, why did it not pass, and was the process just and successful? Let’s take a closer look.

SIMD 0228 — A Hasty Proposal

What is the 228 Proposal?

The 228 proposal aims to dynamically adjust the inflation rate based on the staking rate, with the goal of maintaining a 50% staking rate and long-term reducing the issuance rate of SOL.

Solana's current inflation model is a gradually declining curve over time. At the launch of the mainnet (March 2019), an inflation rate of 8% was set, which has since decreased, with the current inflation rate at approximately 4.8% and a long-term target inflation rate of 1.5%-2%.

If this proposal were to pass, short-term staking rewards would decrease (based on a staking rate between 1% - 4.5%), while the long-term inflation rate would approach 1.5%.

Currently, the staking rate is 70%, so if 228 passes, short-term staking rewards for SOL would decrease, long-term issuance would reduce, and staking yields would be adjusted in real-time based on the staking rate.

Unlike proposals like SIMD 0123, where validators could choose whether to opt in, 0228 is mandatory, meaning that once initiated, it will affect the interests of all stakers.

Voices in Support

This proposal was put forward by Tushar and Vishal from Multicoin Capital, with support from Anza and former Consensys researcher Max. Their reasons include:

#Reducing unnecessary token issuance and lowering inflation costs

Solana's current fixed inflation model is a form of "dumb emissions," as it does not take into account the actual economic activity or security needs of the network. With an inflation rate of 4.8% at the beginning of 2025, approximately $3.82 billion worth of new tokens would be issued annually (based on an $80 billion market cap). This high inflation essentially dilutes SOL holders, especially given the current staking rate of 65.7%—the network's security is already well assured.

By passing this proposal, the concept of staking shifts from "overpaying to ensure security" to "finding the minimum necessary payment."

Interestingly, this point echoes the arguments made by some KOLs in Solana who previously attacked Ethereum's economic security, claiming that too many assets support an economy viewed as a "meme."

#Releasing capital to promote DeFi ecosystem development

The current high staking rate (65.7%) leads to a large amount of SOL being locked up, suppressing capital flow within the DeFi ecosystem. Kamino founder Marius pointed out, "Staking encourages hoarding but reduces financial activity," similar to how high interest rates suppress investment in traditional finance.

It is worth noting that the main supporters of DeFi protocols on Solana are also the VCs proposing the proposal, so releasing liquidity into DeFi is also a significant motivation.

#Reducing the "leaky bucket effect" and enhancing ecosystem autonomy

The leaky bucket effect refers to the significant wear and leakage of value within the ecosystem during economic activities. Since the newly issued SOL from inflation is considered ordinary income and is taxable in the U.S., the amount generated from inflation will proportionally extract value from the entire ecosystem. For Solana, approximately $650 million in taxes and about $305 million in exchange fees have already leaked out of the ecosystem.

From a first principles perspective, it essentially indicates that Solana has entered a stable phase, and the initially arbitrary inflation model has become unreasonable. The development of the chain should aim to enhance economic activity and correspondingly improve the inflation scheme.

Placeholder partner Chris summarized that true benefits should come from demand-side spillover to the supply side, rather than relying on a fixed inflation setting that benefits cold starts. In the long run, the arguments of the supporters do have some merit. Once a public chain ecosystem has passed the cold start phase, it naturally requires a more ideal economic system to drive economic development.

Voices in Opposition

A faction led by Solana Foundation Chair Lily opposed the passage of this proposal. The main point of contention was whether to implement this proposal in such a short time frame, rather than allowing for a longer discussion, as the proposal could significantly impact different participants (engineers at the network layer, developers at the product layer, and institutions at the economic layer). Currently, most discussions are among core network personnel and product layer personnel, with fewer voices from the product layer and institution-led economic layer groups, who are further removed from the information channels. Therefore, they argue that it should not be rushed through before the arguments are sufficiently developed.

Many opponents expressed concerns about the potential loss of small validators. Small nodes, whether in terms of scale effects or bargaining power, are at a disadvantage compared to large nodes, so a reduction in inflation would first eliminate these smaller nodes, harming Solana's decentralization. However, after speaking with some Solana nodes, I found that most still support the passage, primarily due to Solana's substantial subsidies and a shared belief in the value of SOL as it continues to improve. There is a palpable sense of community cohesion within Solana, but that is beside the point.

It is clear that both sides are dissatisfied with the current inflation model and agree that it needs improvement. The point of contention lies in whether to hastily implement changes within two weeks.

In addition, there may be some interest considerations at play. The simplest is that a large number of SOL holders, especially those who can obtain higher returns from non-staking ecosystems (DeFi), naturally do not want inflation to remain at such a high level. The typical profile here includes the VCs behind Solana and the projects they support.

Another important adoption direction for Solana currently is institutional, including ETFs and more traditional institutional use cases. Therefore, those promoting institutional adoption will certainly hold opposing views. Regarding institutional adoption, whether the passage of SIMD is beneficial is controversial; supporters argue that traditional institutions are more averse to high-inflation assets, while opponents believe that traditional assets have greater uncertainty concerns regarding dynamically changing inflation rates.

I believe that the uncertainty of the mechanism may hinder institutional adoption even more—institutions can assess the asset attributes under the mechanism, but if the mechanism keeps changing, it complicates their evaluations. Therefore, for institutions, it is either to pass quickly or to wait until initial adoption is completed before negotiating together—at that point, with more conflicting interests, it may be even harder to pass.

Why Now?

This raises the question of why such a hasty proposal was introduced and pushed forward.

Perhaps it is because Solana still retains a large trading volume in the aftermath of the meme craze, leading to high fees and MEV income for nodes, so adjustments to the staking mechanism may not provoke significant controversy. In 2024, Solana's total MEV earnings reached $675 million, with a clear upward trend; in Q4, the MEV earnings for nodes even exceeded inflation rewards. For this reason, nodes currently have relatively low sensitivity to short-term inflation income. If the Solana chain were to cool down completely, the income loss caused by this proposal would undoubtedly provoke opposition from the staking community.

Solana's Restaking is about to begin, with Renzo, Jito, and others already showing signs. Looking at Ethereum's history, the emergence of liquid staking and Restaking will provide substantial subsidy benefits to stakers and validators, allowing nodes to reduce their concerns about inflation rewards.

The Ethereum Foundation also proposed improvements to the inflation curve last year, similar to anchoring the staking rate to a fixed ratio to reduce excessive staking. The argument at that time was that, given that economic security was already more than sufficient, they hoped to release more liquidity while reducing the substitutive effect of Lido ETH and other LSTs on ETH.

This proposal sparked a brief discussion after it was put forward. It was a moment for OGs to reassess Ethereum's economic mechanisms after the transition to POS. The proposal itself and the discussion process presented a wealth of computational reasoning to support it, but ultimately, without clarifying the theoretical basis, the proposal did not advance. Ethereum's economic arguments may have provided some reference for 228, but the opposition it faced also reflected the difficulty of passing a proposal that "cuts" interests.

The final result was also within reason. Perhaps under the foundation's leadership, validators formed a bearish view of the proposal, concerned about institutional adoption. Or perhaps this decision was indeed too hasty, leading to a lack of consensus among validators and resulting in voting discrepancies. Alternatively, small validators may have collectively chosen to oppose due to short-term income pressures. A broad discussion does not necessarily mean a deep discussion; without depth, divisions can arise. The hasty push for the proposal also reflects the current lack of clarity among various parties in Solana regarding the chain's positioning, the unclear phase, and the consensus pain of what direction to take after the memecoin supercycle.

The Governance Process is a Victory

This proposal, while hasty, sparked a very transparent and open discussion in just a few weeks. Both sides spoke candidly on Twitter, with no moderates in between, directly stating their support or opposition along with their arguments. This mode of discussion allowed everyone to understand the considerations of both sides. At the most intense moments, a Space was even organized where relevant parties expressed their views.

Another highlight was the acceptance of community voices. Numerous Solana projects/builders received responses to their candid suggestions on Twitter, which were also included in the discussions during the Space. The proposal transformed from an obscure formula into the voice of each community, prompting exploration and discussion. One point of criticism regarding the voting was that stakers could not directly participate in the opinion voting, which also led to many contradictions among large nodes—how to coordinate the opinions of all stakers and provide a final decision. This is a problem that all public chains need to solve, and Solana has highlighted this issue for the first time.

The proposal attracted 74% of the staked supply to participate, demonstrating a high level of community engagement. The clear voting mechanism and passage threshold of SIMD made the decision-making process more transparent and predictable. In contrast, Ethereum's proposal decision-making process is relatively vague, primarily relying on discussions and consensus among core developers, lacking a formal voting mechanism.

Finally, there is the efficiency of the proposal. Even though we often criticize it for being too rushed, the proposal went from being introduced to voting completion in less than two months, which makes one marvel at the efficiency of this ecosystem in implementing ideas from top to bottom. This is likely why Tushar considers it a victory.

Conclusion

Overall, the SIMD 228 proposal reflects that Solana, after a prosperous period of innovating asset issuance models, has entered a decision-making phase regarding institutional adoption and the continued construction of on-chain consumer applications, with emerging contradictions in interest distribution serving as the catalyst for the entire event.

Supporters need to leverage this prosperous phase of on-chain activity to quickly push for reforms with minor friction, but the haste has led to intense yet insufficient discussions, with inadequate support and education for small validators, resulting in a lack of unified consensus among validators. The proposal's lifecycle was very short, and this process also demonstrated the execution power and openness of the Solana ecosystem, making it an excellent governance case worthy of study by all ecosystems.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。