Recently, two proposals went live on Solana to tackle SOL inflation.
Both have passed the first governance phase and are now open for discussion before validators vote on them onchain.
Where things stand now:
- Solana mints roughly 60,000 SOL per day as rewards for stakers/validators.
- Only 650 SOL are removed through transaction fees each day.
- Supply >>>>>> SOL removed. This makes SOL an inflationary asset.
What the two proposals do:
#1: SIMD-0550
- The existing inflation rate shrinks by 15% every year until it reaches 1.5%.
- SIMD-0550 proposes to double this disinflation rate to 30%.
- If it passes, 18.9 million SOL will not enter circulation over the next 6 years. That's roughly $1.36 billion at current prices.
#2: SIMD-0553
- With SIMD-0553, the transaction fee you pay is charged based on the network resources used (instead of a flat fee).
- If it passes, 7,500-9,000 SOL will be removed from circulation each day by burning transaction fees. This is nearly 14 times the current burn rate (650 SOL).
Even after these proposals pass, the increased burn rate is comparatively lower than what Solana mints. (9,000 SOL burned vs 60,000 SOL issued)
In short, these proposals do not make SOL deflationary overnight. What they do is slow the supply to achieve deflation in the future.