Solana's SIMD-0411 Proposal: Another Stab at Reducing SOL Inflation
Overview
On Friday evening, Mert Mumtaz, the CEO of Helius Labs (a leading Solana infrastructure provider), submitted Solana Improvement Document-0411 (SIMD-0411), proposing to double the blockchain’s disinflation rate from 15% per annum to 30%. This is the second proposal to update Solana’s inflation schedule this year following the rejection of SIMD-0228 in March. If passed, it would complicate validator economics while reducing overall SOL emissions. The below note outlines the proposal and its potential impact on the network.
Background
Under Solana’s inflation schedule, the supply of SOL tokens increased 8% the first year, and that rate of inflation was set to shrink 15% annually (the disinflation rate) until it reaches a terminal inflation rate of 1.5%. Current inflation stands at approximately 4.18%, with the terminal rate projected to be reached by 2032.
SOL inflation incentivizes validator participation and subsidizes operating costs. In addition to emissions, Solana validators also earn base fees, priority fees, and MEV (see my recent research report on Solana for a more in-depth overview of recent adjustments to Solana’s tokenomics).
While emissions have historically accounted for 98%+ of validator rewards, that portion has decreased to about 90% with the uptick in Solana onchain activity since December 2023. This is a highly variable number that fluctuates with onchain activity, falling as low as ~50% during peak periods of Solana activity in November 2024 and January 2025. Still, even with the recent drop in activity, SOL stakers continue to consistently earn staking yields ranging from 6% to 8%.
SIMD-0411
Proposal Overview
The primary recommendation of SIMD-0411 is to double the annual disinflation rate from 15% to 30%. This adjustment would halve the time required to reach the 1.5% terminal inflation rate (from ~6.2 years to ~3.1 years).
The proposal would also reduce SOL emissions over the next six years by 22.3 million, 3.2% lower than the current expected inflation amount. This equates to roughly $2.9 billion at the current SOL price ($130).
SIMD-0411 would make no other changes to Solana’s inflation mechanism and maintain Solana’s initial terminal inflation target of 1.5%. This differs from SIMD-0228, which was the first proposal to adjust Solana’s emission schedule. Submitted earlier this year, SIMD-0228 proposed a dynamic inflation schedule based on the amount of SOL staked. It was rejected through a contentious validator vote in March 2025 (for more in-depth coverage, refer to my recent Solana report).
Impact on Validators
Nominal staking yields for validators and delegators would gradually decline as the accelerated disinflation rate reduced token emissions over time. Assuming a consistent percentage of SOL remains staked, nominal staking yields would move from roughly 6.4% today to about 5.0% in the first year, then to 3.5% and 2.4% over the following two years as inflation converges toward the 1.5% terminal rate.
While this modest reduction would improve SOL’s long-term supply dynamics, it would slightly compress validator margins, particularly for smaller operators that rely heavily on inflationary rewards. The proposal estimates that around 47 of Solana’s 870 active validators (roughly 5% of the network) would become unprofitable over the next three years, with the majority of the validator set expected to remain sustainable.
However, validators are set to benefit from a decrease in operating costs driven by the upcoming Alpenglow consensus upgrade (covered in depth in my latest Solana report). Alpenglow will overhaul Solana’s consensus mechanism and move voting to an offchain process, which should reduce costs by approximately 20%, with potential for further reductions in the future.
Implementation Schedule
There is no official timeline for voting on the proposal. It is in the community review phase, with active discussion on GitHub, forums, and X. The proposal mentions a 6-month lag period before any change is implemented to account for Alpenglow activation (expected Q1 2026) and the governance process, which means it is likely to be activated in mid-2026 if approved.
Based on recent precedents (SIMD-0228), the process could take 1-3 months before a conclusive vote is held. Voting will be conducted through a stake-weighted onchain vote that is expected to last 2–3 epochs (~4–7 days total), requiring simple majority approval among participating validators. Validator voting power is proportional to delegated stake.
Major Takeaways:
As mentioned in my Solana report, we expected discussions around Solana’s inflation schedule to reemerge despite the rejection of SIMD-0228 and SOL inflation remains a contentious issue among the Solana community given its impact on validator economics.
Those in favor of adjusting the inflation schedule primarily argue it would:
Reduce sell pressure for SOL, especially from large institutional validators that must sell a portion of their emissions to satisfy tax obligations.
Enhance DeFi activity on the network by reducing the opportunity cost of not staking SOL. Despite leading in categories like decentralized exchange (DEX) volumes, network and application fees, and stablecoin velocity, Solana’s DeFi vertical continues to lag in adoption relative to competitors like Ethereum.
Those opposed to adjusting the inflation schedule primarily argue it would make SOL less attractive to large institutional allocators and retail investors that like the high staking yields, which partially offset the risk of holding a volatile asset. Additional objections include the impact on smaller validator profitability and potential reductions in the number of Solana validators, which could undermine network decentralization and security.
The proposal seeks to meet both parties in the middle. While it would accelerate the reduction in SOL inflation, it would do so in a more gradual manner than prior proposals and would not change the terminal SOL inflation rate. By not introducing a dynamic rate, it also provides validators with a consistent and predictable inflation rate so they can plan for the adjustment. Additionally, adjustments to SOL inflation may help SOL performance by reducing sell pressure and attracting new investors that previously viewed its high inflation as a turnoff.
Critically, the proposal highlights shifting dynamics in the crypto ecosystem where protocols and applications must focus on generating sustainable economic activity as the primary incentive mechanism for validator activity rather than depending on token emissions. SOL inflation has been successful in providing an initial bootstrapping mechanism for the ecosystem, but Solana has evolved into a more mature blockchain with some of crypto’s highest revenue-generating applications and one of its largest user bases. Validators on the network will be best incentivized to participate as long-term honest stakeholders if their primary source of revenue comes from demand for block space (base/priority fees/MEV) or from running profitable businesses on the chain itself.
Conclusion
A consistent theme in the Solana ecosystem over the past year has been the aggressive push by teams across the protocol and application layers to improve every aspect of the network. This is something we have covered extensively at Galaxy Research. SIMD-0411 fits squarely within that broader effort and reinforces Solana’s long-term commitment to not ossify or slow its pace of development.
At the same time, the proposal arrives at a time when Solana face challenges in maintaining its status as one of few leading high-performance blockchains. Network activity has softened in recent months, with declines in overall users and DEX volumes following a period of record activity earlier in the year. Within the ecosystem there is intensifying competition for market share and competing ideas over the best path forward for implementation of technical upgrades like Application Controlled Execution. Meanwhile, Solana faces intensifying competition from established ecosystems like Binance Smart Chain and emerging ones like Base and Hyperliquid.
Just like SIMD-0228, SIMD-0411 will face a highly contentious vote and it is too early to determine whether it will pass. No matter the outcome, however, the proposal shows the Solana ecosystem’s continued push for sustainable economics. Whether these adjustments translate into durable competitive advantage will depend on the network’s capacity to sustain developer activity and user demand in an increasingly competitive market.
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