Solana plans to launch coin in a market-oriented manner! Focusing on combating inflation and incentive mechanisms, 65% SOL stake may be affected.

Encryption venture capital company Multicoin Capital proposed a new solution on 1/17, suggesting the adoption of a market-oriented launch coin model to address inflation and encourage more users holding SOL Tokens to participate in stake. At the same time, it avoids excessive issuance of tokens from impacting network security and token holders.

The focus of the proposal is that the market-oriented launch coin model reduces inflation

The SIMD-0228 proposal made by Multicoin Capital on GitHub mainly adjusts Solana's token issuance mechanism and reduces the problem of excessive concentration of holdings due to high inflation factors.

Assuming the stake participation rate is below 50%, the issuance rate of SOL Token will be increased to attract more users to participate in stake and maintain network security. If it exceeds 50%, the Token issuance rate will be reduced, and a certain inflation rate limit will be set to control the issuance of SOL Token, in order to avoid excessive dilution of Token value.

According to Stakingrewards data, approximately 65% of the circulating supply of SOL Tokens is currently in stake state. Assuming the proposal is passed, it will directly affect the Solana ecosystem economy and the distribution of benefits to participants.

Stakingrewards data shows that 65% of SOL Token circulation is in stake status. The issue of inflation is being discussed again, starting from the proposal SIMD-0096.

The inflation problem of Solana was brought up for discussion as early as May last year. At that time, Solana validators voted for another proposal, SIMD-0096, which aimed to cancel the 50% destruction mechanism and allocate the priority fee 100% to the validators.

However, this move has sparked debate from both supporters and opponents. Supporters believe that this can increase the earnings of validators and further incentivize them to maintain the security of the Solana network. However, opponents warn that removing the burn mechanism will increase the inflation rate of SOL tokens, not only diluting the value of the tokens but also harming the interests of non-stake SOL holders. Although Proposal SIMD-0096 was approved with a support rate of 77%, it has not yet been implemented on the Solana mainnet.

(Solana validators will receive 100% priority fees, and governance proposals will be approved)

Is the MEV profit sufficient to provide to validators

Supporters of modifying the Solana launch coin model believe that validators are already able to earn sufficient income through Maximum Extractable Value (MEV), so there is no need to allocate 100% of the priority fees to validators, nor is it worth the risk of increasing the inflation rate.

As the largest third-party client of the Solana network and the liquidity stake protocol, Jito accumulated over $100 million in priority fees last December, providing additional income to validators and becoming an important source of validator revenue, indirectly supporting the argument of 'reducing priority fee allocation'.

The figure shows a list of Jito's monthly priority fees from last year.

This article Solana plans to adopt marketization launch coin! Focus on reducing inflation and incentive mechanisms, 65% SOL stake or affected first appeared in Chain News ABMedia.