Solana network’s inflation rate has just been approved for a faster reduction, albeit by a narrow margin. Proposal SGP-0002, titled “Double Disinflation,” was officially approved to increase the annual inflation reduction rate from 15% to 30%. The terminal inflation rate remains set at 1.5%, but the estimated time to reach it has been shortened from 5.7 years to roughly 2.8 years.
The new rule is expected to eliminate 18.9 million SOL from projected issuance over the next six years, equivalent to 2.6% of the total supply under the previous schedule. Governance voting results showed 176.29 million SOL in favor, representing 67% of participating stake. A total of 66.19 million SOL voted against and 20.63 million SOL abstained, with voter participation reaching 60.7% of all eligible stake. The approval threshold was set at 66.67%, meaning the proposal passed with a margin of just one-third of a percent.
Objections from Validator Operators
Michael Hubbard, CEO of Solana infrastructure and treasury firm SOL Strategies, called the rapid cut a premature decision. He argued that the new policy was rushed before its full impact on network participants could be properly understood. Hubbard noted that the current inflation rate of around 4-4.5% is not overly extreme, while rejecting the premise that new coin issuance suppresses SOL’s price performance.
According to Hubbard, staking rewards are generally restaked by holders rather than sold on the open market. Because of this distribution pattern, reducing new coin issuance will not automatically alter SOL’s market price. SOL Strategies operates validators and staking services on the Solana network, making them directly exposed to diminishing yields. In an earlier separate report, analysts at Galaxy Research also warned that cutting staking yields could make validator operations less attractive for participants.
Procedural Integrity Under Scrutiny
Hubbard’s criticism extended to procedural integrity concerns in another vote, proposal SGP-0003 on the Resource and Inclusion Fee. That proposal secured only 53.9% approval, failing to meet the two-thirds requirement when abstentions were included in the denominator. Approval figures only surged to 74% after organizers excluded abstentions from the deciding count - a move Hubbard described as a breach of the governance process.
The narrow voting margin within the community highlights that key infrastructure operators disagree with this transition. Service providers are now forced to adapt to an issuance schedule shrinking twice as fast as originally projected.
Source: crypto.news.
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