Multicoin releases Solana Improvement Proposal, proposing to adjust SOL issuance rate to a market-based solution

Odaily News Multicoin Capital, one of Solana’s early investors, is now trying to change the Solana network’s inflation mechanism.

Tushar Jain and Vishal Kankani, two partners at Multicoin Capital, submitted a "smart release" proposal for Solana, proposing to adjust the issuance of SOL from the current fixed schedule to a market-based solution. Multicoin's proposal could reduce SOL inflation.

In Solana terms, inflation refers to the network issuing SOL to validators who run the Solana software and help build the blockchain. Validators then pass these issued SOL, along with some MEV (miner extractable value) rewards, to stakers who delegate SOL to them.

In short, Multicoin's proposal sets a target staking rate of 50% to ensure the security and decentralization of the network. If more than 50% of SOL is staked, issuance will be reduced to reduce returns and thus discourage staking. If less than 50% of SOL is staked, issuance will be increased to increase returns and encourage staking. The minimum inflation rate is 0%, and the maximum is based on the current Solana issuance curve.

Solana's inflation rate was initially set at 8% and will be reduced by 15% each year until it reaches an inflation rate of 1.5%. According to Solana Compass, SOL's inflation rate is currently about 4.8%. Solana co-founder Anatoly Yakovenko said in a podcast that the concept of a fixed rate was borrowed from the Cosmos blockchain and that inflation is just "accounting treatment." (Blockworks)