SOL has risen by over 8% in the past 24 hours, with a cumulative increase of about 44% since August, and its price has returned above $105. This is also one of the strongest single-month performances for this token since 2024. Synchronized with this rise is the final phase of the first binding governance vote on the Solana network, as the market is re-pricing in light of changes to the token supply.
Voting ends today.
This voting will close at epoch 1023, around UTC time 15:30. Solana marks the first activation of the new on-chain governance system, which allows validators and their proxies to cast binding votes based on their staking weights.
- SGP-0001: Confirm the Solana Charter
- SGP-0002: Accelerate the pace of inflation decline
- SGP-0003: Adjusting handling fees and increasing the rate for destruction
Among these, the latter two economic proposals are the ones that truly affect market expectations.
The proposal aims to achieve the 2029 target with reduced issuance.
Proposed by engineers from the infrastructure company Helius, the core idea of SIMD-550 is to increase the annual deflation rate of Solana from 15% to 30%. According to this plan, the inflation rate of SOL will drop more quickly to the long-term lower limit of 1.5%, with the timeline being advanced from 2032 to 2029.
According to the calculations in the text, this means that the newly issued SOL over the next 6 years will be reduced by approximately 18.9 million coins. As a result, the market is betting on a tightening of supply. However, the reduction in new issuance will also lower the yields from staking. The report cites calculations that the annualized yield from staking could drop from the current approximately 5.25% to about 2.25% within 3 years. This poses a pressure on the profitability of some smaller verifiers.
The number of coins to be destroyed in the proposal, or on the designated date, has increased to 9,000.
Another proposal, SIMD-553, was put forward by Solana, a research and development company known as Temporal. The approach aims to increase the volume of SOL destructions by adjusting the handling fees structure. The plan involves splitting the transaction fees into two parts: one part continues to be paid to the verifiers, while the other part is charged based on the computing resources consumed by the transaction and is then directly used for destruction.
If the proposal is approved, the daily destruction volume of Solana may increase from the current approximately 650 SOL to a maximum of about 9000, representing an increase of about 12 to 14 times, depending on the level of network activity. Reports indicate that this change has already passed the code review by the two client teams of Anza and Firedancer on July 20th. The current vote is about whether to enable it, rather than whether the technology is feasible to implement.
Listed company Solana Company opposes two economic adjustments
Nasdaq-listed crypto treasury company Solana Company (stock code HSDT) supports the governance charter itself, but opposes the aforementioned two token economy adjustments. Management stated that the reason for their opposition is mainly due to timing, rather than the direction of the changes.
The company believes that for institutional pledgers, what is more important at present is the predictability of returns, rather than faster compression of issuance. The two economic proposals will be voted on separately, and both require the support of more than two-thirds of the participating pledging weights. Therefore, the failure of one proposal to pass will not affect the outcome of the other.
As of press time, the market has clearly reflected in advance the expectation of tightening supply. Reports mention that the RSI for SOL on the 14th is close to 84.5, indicating strong short-term momentum. The voting results are expected to be announced within a few hours after the end of this round of epoch.
