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Ethereum and Solana developers advanced new initiatives this week that would adjust the blockchains’ inflation schedules.
Six researchers, including the Ethereum Foundation's Justin Drake, submitted EIP-8361 (Tapered Issuance Burn). This Ethereum improvement proposal would burn a rising share of validator rewards as more ETH is staked, reaching 100% once half the supply is staked and thereby removing any issuance incentive to stake beyond that point. At today's ratio of roughly one-third of supply, consensus-layer yield would fall from about 2.6% to 1.2%. Maximal extractable value (MEV) and priority fees would remain untouched. If approved, the reduction would phase in over 18 months. Combined with normal fork lead time, stakers would have close to two years to adjust. The EIP is still a draft, and nothing has been scheduled or voted on. It is being considered for inclusion in Hegotá (Ethereum’s next major upgrade after Glamsterdam, which is scheduled for this fall). Selection is expected to continue into November, and if approved, the upgrade is unlikely to ship before well into 2027.
Meanwhile, two Solana governance proposals are moving in parallel through the network's new onchain governance system, the first real test of the process. SGP-0002 carries a Solana improvement document, SIMD-0550 (from Helius engineers lostintime101 and 0xIchigo), which would double the annual disinflation rate to 30%. This in turn would pull the 1.5% terminal inflation floor forward to 2029 from 2032 and remove an estimated 18.9 million SOL of future emissions. SGP-0003 carries SIMD-0553 (from Temporal's cavemanloverboy), which would replace Solana's flat per-signature fee with a resource-based fee that scales with the compute each transaction requests and is burned in full. Estimates put the potential increase in daily SOL burns from roughly 650 to between 7,500 and 9,000. Each SGP secured the required 15% support from active stake to move to a discussion phase, which will take place over the coming 16 days, followed by a fixed 11-epoch (roughly 22-day) process of discussion, stake snapshot, and voting. Passage requires two-thirds of decisive stake to pass.
Our Take
Ethereum and Solana are posing the same fundamental question to their stakeholders: how much security budget is required to secure their chains, and are the tradeoffs worth adjusting those parameters? The proposals differ in design and process but emerge in a similar market environment where both tokens have suffered large drawdowns and consistently underperformed.
The Ethereum proposal is the more contentious of the two. It seeks to reform a mature issuance curve that was already altered once during the 2022 transition from proof of work to proof of stake. Proponents argue the current model creates an open-ended incentive for staking rates to trend toward 100% (the authors project roughly 55% by 2028), raising the risk of concentration among liquid staking providers and large operators. Their design seeks to remove that permanent yield floor, limit dilution, and strengthen ETH's monetary properties. Critics, including a number of high-profile voices across DeFi, staking, and the broader developer community, warn that the resulting yield compression could pressure solo stakers, gut Ethereum's DeFi ecosystem, and dampen institutional demand. They also question the compressed timeline for a material monetary policy change.
Solana's changes are narrower and more explicitly focused on scarcity. Accelerating the path to the terminal inflation rate would primarily benefit long-term holders by removing a meaningful amount of future supply with the cost falling on current stakers and validators through faster yield compression. The resource-based fee burn (SIMD-0553) would strengthen the link between network usage and token value accrual, again favoring holders by raising costs for more complex transactions. Both Solana proposals appear less controversial than Ethereum's, in part because similar ideas have been debated across multiple iterations over the past year and a half.
Inflation successfully bootstrapped both networks. It paid validators to secure chains that had almost nothing running on them and bought the runway that produced the ecosystems both now enjoy. That subsidy has an expiry date. The healthier long-term state is one in which validating is a thin-margin utility attached to a profitable onchain business or is funded by blockspace demand rather than emissions. Supply-side adjustments can help at the margin and may generate useful narratives, but they are not the binding constraint on either chain. Demand is what ultimately reprices these assets and earns them the legitimacy to move from emerging settlement layers to infrastructure used globally for large-scale finance and retail activity.
Both ecosystems have spent this cycle improving their technology stacks, advancing institutional adoption, and expanding retail products. That work should remain the priority. The security concerns that the Ethereum proposal raises may prove valid over a longer horizon, because neither chain is worth much if it cannot be distinguished from a centralized alternative. But, given current levels of adoption, they should not consume the oxygen the demand-side efforts still need.
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