SIMD 0228 Proposal Not Passed: A Major Advancement in Solana Governance?

Recently, a highly anticipated Solana governance proposal SIMD 0228 ultimately failed to pass. The voter turnout reached a historical high, approaching 50% of the total token supply, but the proportion of supportive votes did not reach the required 66.67% supermajority threshold.

The background of this proposal is that Solana has gradually returned to a calm phase after experiencing the Memecoin frenzy. The weekly trading volume has fallen from nearly $100 billion at the beginning of the year to less than $10 billion, which is below the level seen at the early stage of the Memecoin rise.

With the Memecoin craze, Solana has become one of the most successful public chains in this cycle. As the popularity of Memecoins begins to wane, Solana faces the challenge of repositioning itself. It was at this time that a certain capital group proposed the 0228 proposal, sparking intense debate within the community. Various parties argued their cases on social media until the very last moment of the voting.

In this debate process, we can see many shadows of the Ethereum community pushing for change in the past. The proposal window is very short, involving many long-term considerations and short-term solutions, and of course, there are some interests that are inconvenient to mention. However, its transparency allows us to glimpse the current attitudes and strategies of Solana leaders.

Although the proposal was rejected, the proposer still called it "a victory", citing the high voter participation rate and extensive community discussions as evidence of Solana's decentralized governance capabilities.

Let's take a look at the game, significance, and reasons behind the failure of the Solana proposal governance, as well as whether the governance process was fair and successful.

SIMD 0228 - A Hasty Proposal

Proposal Content

The proposal aims to dynamically adjust the inflation rate based on the staking rate, with the goal of maintaining a 50% staking rate and gradually reducing the issuance rate of SOL.

Solana's current inflation model is a gradually declining curve over time. At the mainnet launch on ( in March 2019, an inflation rate of 8% was set and is gradually declining, currently around 4.8%, with a long-term target of 1.5%-2%.

If this proposal is passed, short-term staking rewards will decrease to between 1% and 4.5% based on the staking rate, and the long-term inflation rate will approach 1.5%.

The current staking rate is 70%, so if 0228 passes, the short-term staking rewards for SOL will decrease, and in the long term, the issuance will reduce, while the staking yield will adjust in real-time based on the staking rate.

Unlike some proposals where validators can choose whether to participate, 0228 is mandatory and will affect the interests of all stakers.

) Supporters' Reasons

The proposal was put forward by a certain capital party and received support from some researchers. The main reasons include:

1. Reduce unnecessary token issuance to lower inflation costs.

The current fixed inflation model is seen as "blind issuance", without considering the actual economic activity or security demand of the network. Based on an inflation rate of 4.8% in early 2025, approximately $3.82 billion ( will be newly issued each year based on a market cap of $80 billion ). This high inflation essentially dilutes the interests of SOL holders, especially given the current high staking rate of 65.7% - network security has been fully ensured.

This proposal means that the staking philosophy shifts from "overpaying to ensure security" to "seeking the minimum necessary payment."

2. Release capital to promote the development of the DeFi ecosystem

The current high staking rate of 65.7% has led to a large amount of SOL being locked up, inhibiting the flow of capital in the DeFi ecosystem. A certain founder pointed out, "Staking encourages hoarding, but reduces financial activity." This is similar to the way high interest rates suppress investment in traditional finance.

3. Reduce the "leaky bucket effect" and enhance the autonomy of the ecosystem.

The "leaky bucket effect" refers to the significant wear and leakage of value within an ecosystem during economic activities. The newly issued SOL is considered ordinary income in the United States and is subject to taxation, so the amount generated by inflation will proportionally extract value from the entire ecosystem. Solana has already seen approximately $650 million in taxes and about $305 million in exchange fees flowing out of the ecosystem.

From the perspective of first principles, Solana has essentially entered a stable phase, and the inflation model set in the early stages appears unreasonable. The development of the chain aims to enhance economic activity and should also correspondingly improve the inflation scheme.

A certain partner summarized that true benefits should come from the spillover of demand side to supply side, rather than relying on a fixed inflation setting that is favorable for cold starts. In the long run, the argument of the supporters does hold some truth. Once the public chain ecosystem has passed the cold start phase, a more ideal economic system is naturally needed to promote development.

concerns of opponents

A faction led by the chairman of a certain foundation opposes the proposal. The main point of contention is whether to implement this proposal in such a short time frame, rather than allowing for a longer discussion. Proposals that significantly alter asset attributes will affect participants at different levels, including ( network layer engineers, product layer developers, and economic institutions at the economic layer ). Currently, discussions are primarily focused on personnel at the core network and product layers, while voices from the product layer and economic layer groups, which are further removed from information channels, are less prominent. Therefore, it should not be rushed through before the arguments are sufficiently robust.

Many opponents are concerned that small validators may be lost. Small nodes are inferior to large nodes in terms of economies of scale and bargaining power. The reduction in inflation will first eliminate this group of small nodes, which may harm the decentralization of Solana. However, after communicating with some nodes, it was found that most nodes still support it, because of Solana's large subsidies and their confidence in the continuously improving value of SOL itself.

Clearly, both parties are dissatisfied with the current inflation model and believe improvements are necessary. The point of contention is whether to rush to implement it within two weeks.

In addition, there may be some considerations of interest. A large number of SOL holders, especially those who can obtain higher yields from the non-staking ecosystem ### DeFi (, naturally do not wish for inflation to remain at a high level.

Solana currently has an important adoption direction focused on institutions, including ETFs and more traditional institutional use cases. Stakeholders driving institutional adoption may hold opposing views. Regarding institutional adoption, there is controversy over whether SIMD is beneficial; supporters believe that traditional institutions are more averse to high-inflation assets, while opponents argue that traditional assets have greater uncertainty concerns regarding dynamically changing inflation rates.

The uncertainty of the mechanism may hinder institutional adoption more - institutions can assess asset attributes under a fixed mechanism, but if the mechanism is constantly changing, it creates obstacles for assessment. Therefore, for institutions, it is either to pass quickly or to wait until preliminary adoption is completed before negotiating - by then, there will be more conflicts of interest, making it potentially more difficult to pass.

) Why choose this time?

This raises a question: why push forward such a proposal in such a hurry?

It is possible that the high trading volume of Solana, which remains in the afterglow of the meme craze, has led to the current high fees and MEV income for nodes; therefore, the adjustment of the staking mechanism will not spark much controversy. In 2024, the total MEV earnings of Solana reached $675 million and showed a clear upward trend, with Q4 node MEV earnings even exceeding inflation rewards. As a result, nodes are relatively less sensitive to short-term inflation income. If there is a complete cooling-off phase on the Solana chain, the income reduction caused by this proposal will surely provoke opposition from the staking community.

The Restaking of Solana is about to begin, and some projects are already showing signs. Looking at the history of Ethereum, the emergence of liquid staking and Restaking will bring substantial subsidy rewards to staking and validators, and it will also alleviate nodes' concerns about inflation rewards.

A certain foundation also proposed a plan to improve the inflation curve in the middle of last year, similarly anchoring the staking rate to a fixed ratio to reduce excessive staking. The argument at that time was that under the premise of sufficient economic security, they hoped to release more liquidity while reducing the substitute effect of certain tokens on ETH.

The proposal sparked a brief discussion after it was put forward. It was a re-examination of Ethereum's POW economic mechanisms by experienced individuals following the POS transition. Both the proposal itself and the discussion process provided substantial computational deductions for support, but ultimately, in the absence of clear theoretical foundations, the proposal did not advance. The economic reasoning of Ethereum may have provided a reference for 228, but the opposing voices it received also reflected the difficulties of pushing through such a "reduction" of interests proposal.

The final result is within reason. It may be that under the auspices of a certain foundation, validators have formed a pessimistic view on the proposal, worrying about its impact on institutional adoption. Perhaps this decision was indeed too hasty, leading to a lack of consensus among validators and resulting in voting discrepancies. Alternatively, smaller validators may have reached a consensus on short-term income pressures, collectively choosing to oppose it. Widespread discussion does not necessarily mean in-depth discussion; lack of depth in discussion can lead to differences. The hastily pushed proposal also reflects the current lack of clarity among various parties regarding Solana's positioning and phases, and there is a lack of consensus on the next steps following the memecoin craze.

The governance process is a victory

Although this proposal was rushed, it has sparked very transparent and open discussions in just a few weeks. Both sides have been outspoken on social media, without any moderates, directly expressing their support or opposition and explaining their reasons. This mode of discussion allows everyone to understand the considerations of both parties. At the most intense moments, online discussions were even held, where relevant parties expressed their views.

Another highlight is the acceptance of community voices. Numerous project teams/builders receive responses to their candid suggestions on social media, which are also included in discussions. Proposals are no longer obscure formulas on paper, but have transformed into the voices of each community being proposed for discussion. One point of criticism regarding voting is that stakers cannot directly participate in opinion voting, which also brings about many contradictions among major nodes - how to coordinate the opinions of all stakers and provide a final decision. This is a problem that all public chains need to solve, and Solana has highlighted this issue for the first time.

The proposal attracted 74% of the staked supply participation, demonstrating high community engagement. SIMD's clear voting mechanism and thresholds make the decision-making process more transparent and predictable. In contrast, the proposal decision-making process of a certain public chain is relatively vague, relying mainly on discussions and consensus among core developers, lacking a formal voting mechanism.

Finally, there is the efficiency of the proposal. Although often criticized for being too hasty, the proposal takes no more than two months from submission to voting to completion, making one marvel at the efficiency of this ecosystem's top-down implementation of ideas. This is also why some believe this to be a victory.

Conclusion

Overall, the SIMD228 proposal reflects that Solana has entered a decision-making phase for institutional adoption and continued development of on-chain consumer applications after the prosperous period of innovation in asset issuance models. The emergence of conflicting interests is the catalyst for the entire event.

Supporters hope to quickly promote reforms through small friction during the prosperous phase of on-chain activities, but the rush has led to intense yet insufficient discussions, with inadequate support and education for small validators, resulting in a lack of unified consensus among validators. The lifecycle of the proposal is very short, and this process reflects the execution capability and openness of the Solana ecosystem, making it an excellent governance case worthy of learning by all ecosystems.