After the massive token unlock, Solana hopes to curb selling pressure through this solution.
TechFlow Selected TechFlow Selected
After the massive token unlock, Solana hopes to curb selling pressure through this solution.
Kyle Samani loudly calls for vote: Don't let Solana become Ethereum!
Navigating Web3 tides with focused insightsAuthor: Azuma, Odaily Planet Daily
Due to multiple factors, Solana (SOL), once highly anticipated by the market, has recently performed poorly.
The reasons are threefold: first, a severe overall market correction; second, the fading meme coin rally that reduced demand for SOL; and third, the largest token unlock in SOL’s history occurring on March 1—this unlocked supply originated from FTX’s bankruptcy auction, purchased by institutions including Galaxy, Pantera Capital, Figure, and others, totaling approximately 11.2 million SOL, or 2.4% of circulating supply.
Yet, looking at social media activity among top KOLs within the Solana ecosystem, few are discussing price movements or the unlock. Instead, key figures such as co-founder Toly (Anatoly Yakovenko) and Multicoin Capital founder Kyle Samani are actively debating a potential upgrade known as SIMD-228.
What is SIMD-228? How will it affect Solana's operations and SOL's market performance? We’ll analyze this below.
What Is SIMD-228?
In short, SIMD-228 is an upgrade proposal concerning SOL staking and inflation mechanisms.
SIMD-228 was initially proposed by Tushar Jain and Vishal Kankani of Multicoin Capital, and has received support from Toly and Max Resnick, chief economist at Anza (the operator of Solana’s primary client).
SIMD-228 aims to link SOL’s inflation rate to its staking ratio. Specifically:
-
When the staking ratio is below 50%, the inflation rate increases to encourage more staking.
-
When the staking ratio exceeds 50%, the inflation rate decreases to reduce rewards.
According to estimates from the Solana community, given the current network staking levels, SIMD-228 could reduce SOL’s annual inflation rate from 4.5% down to as low as 0.87%.
Odaily note: The much-discussed massive unlock on March 1 accounted for “only” 2.4% of circulating supply. If SIMD-228 passes, the reduction in circulating supply through lower inflation over one year could reach 3.63% (4.5% – 0.87%).
How Is the Community Reacting?
Since being placed on the agenda, discussions around SIMD-228 within the Solana community have remained deeply polarized. Supporters argue the proposal would significantly improve Solana’s economic efficiency and reduce selling pressure via lower inflation. Critics worry it may increase centralization risks and harm smaller validators.
Supporting Views and Logic
The main arguments in favor of SIMD-228 are threefold:
-
Improved Network Efficiency: SIMD-228 adjusts network demand through dynamic inflation, avoiding inefficiencies caused by a fixed inflation rate.
-
Lower Inflation Rate: By reducing inflation, SIMD-228 can mitigate future selling pressure, potentially increasing token value and attracting long-term investors.
-
Incentivizes Staking: When staking rates are low, increased inflation rewards under SIMD-228 encourage more users to stake, maintaining decentralized security for network operations.
Opposing Views and Logic
-
Centralization Risk: The community fears large validators might manipulate staking ratios for profit, increasing network centralization and undermining Solana’s core values.
-
Harms Small Validators: Some members worry small validators may struggle to remain profitable under the new mechanism, squeezing their survival space.
-
Uncertain Rewards and Complex Parameters: Dynamic inflation rates may make it difficult for stakers to predict returns, increasing complexity in investment planning and weakening long-term participation incentives.
Kyle Samani Loudly Urges Voting: Don’t Let Solana Become Ethereum!
A staunch bull of SOL, Multicoin Capital founder Kyle Samani has posted multiple updates today, vocally urging the community to vote on SIMD-228. His full message reads:
There’s widespread discussion about Solana SIMD-0228.
Tushar and Vishal have shared their views across various forums. I’ll share mine here too.
I think almost everyone agrees that the current inflation rate is too high. I agree with that.
The opposition seems to center on a few points: “We don’t exactly know what target inflation rate we should set”; “We don’t know how this will impact validators, especially in a bear market, where effects are even more uncertain”...
I see several problems with this reasoning:
a) False precision. Even if you model hypothetical scenarios trying to predict how the world might change, I guarantee your model will still be largely wrong; b) Don’t let the pursuit of perfection become the enemy of progress.
I’m not worried at all about consensus security.
Given the unstaking period (about two days), a significant portion of staked tokens isn’t sensitive to yield changes.
Concerns about validator profitability are valid. I expect at least 100 validators to exit the network, possibly more.
But the biggest cost for validators isn’t dollar-denominated hardware, power, or bandwidth—it’s voting costs (currently around 2 SOL per day).
Max and many others have recognized this issue and proposed solutions.
Could proposals that reduce voting costs arrive much later than expected? Yes, there’s that risk.
Is that outcome likely? I don’t think so, because I believe no stakeholder wants higher validator voting costs.
If we make Solana require too much structure and planning, we’ll become like Ethereum—paralyzed by over-analysis.
We must push things forward as fast as possible. That’s critical. We won’t get it perfect the first time—and that’s okay.
Solana’s history is one of moving fast. We can’t afford complacency now.
Everyone broadly recognizes action is needed here. So let’s act—while minimizing collateral damage along the way.
Don’t let Solana become Ethereum!
Timeline
According to the current schedule, voting on SIMD-228 is expected to begin at epoch-753 on March 6.
Considering the prevailing sentiment among leadership, I believe the proposal will likely pass, though strong opposition will remain. As Kyle Samani said, nothing will be perfect on the first try. Going forward, the Solana Foundation may need to optimize governance models and balance reward mechanisms to ease tensions.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Odaily
