Solana Completed its first binding on-chain governance vote, with validators approving the token reduction proposal SGP-0002. According to the new plan, the annual token reduction rate will increase from 15% to 30% for SOL, and the network will reach the minimum issuance rate of 1.5% earlier than expected, from 2032 to 2029.
This means that the number of new SOL tokens added in the coming years will be even smaller. According to the calculations in the text, the cumulative new issuance over the next six years is expected to decrease by about 18.9 million tokens. For token holders, the contraction of the token supply is faster; however, for those participating in staking, the reduced issuance will also lower staking yields.
The voting results just barely passed the threshold.
This proposal was ultimately approved with a support rate of 67.0%, just slightly above the passing threshold of 66.67%. A total of 1,326 votes were cast, and the required quorum of 60.7% was met.
In the final stages of the voting, some major participants changed their positions, leading to a reversal of the results. Reports indicate that Kraken had been voting against before, but adjusted their attitude towards the end. Due to the significant voting weight they held, this change directly affected the final outcome.
Galaxy also initially abstained, but then changed their vote in the last hour. According to the final results, if just a few million votes from SOL had shifted in favor, the proposal could have gone from passing to failing, indicating that the competition in this vote was very fierce.
A reduction in issuance will lower the yields from staking.
Solana The current inflation rate is expected to decline year by year until it stabilizes at a lower limit of 1.5%. The new proposal is not intended to change this end point, but rather to accelerate the rate of decline.
It is stated in the text that if the new path is followed, the yield on collateral may drop from the current approximately 5.25% to around 2.25% within the next three years. This is also an important reason why some collateral service providers are hesitant about the proposal. For institutional pledgers who rely on stable returns, a faster reduction in yields is not necessarily a good thing.
Charter passed, another expense proposal rejected
The same round of voting also included two other proposals.
- SGP-0001, that is, the Solana charter, received 86.0% support and was passed.
- SGP-0003, namely the "Resources and Inclusion Fees" proposal, did not reach the two-thirds threshold.
Among them, SGP-0001 is mainly about officially incorporating this governance voting mechanism into the rules. SGP-0003 attempts to split transaction fees into two parts and introduces new fees that are linked to the consumption of computing resources; the related portions will be directly destroyed.
According to the proposal design, if SGP-0003 is enabled, the daily destruction volume of Solana could increase from about 650 to a maximum of 9000, representing an increase of approximately 12 to 14 times. However, the proposal ultimately received only 53.9% support and was not passed.
Price falls after voting
Before the vote, the market had already partially factored in expectations of supply contraction. Reports show that SOL rose by approximately 44% in the month prior to the vote.
However, after SGP-0003 was not approved, the market trend weakened. Data from Coinbase shows that on August 28th, SOL opened at $109.18, reached a high of $110.14, then fell back to $103.63, and closed at $105, a decrease of 3.83% from the opening price, also below the previous high near $111.
