Multicoin Proposal Seeks to Reduce SOL Inflation and Transition to Market-Driven Emissions

Investment firm Multicoin Capital proposed a shift to Solana's token emission model on Thursday, moving away from a fixed schedule to a dynamic, market-driven approach.

The proposal, authored by Tushar Jain and Vishal Kankani of Multicoin Capital, aims to reduce Solana's inflation. As of January 2025, Solana’s annual inflation rate stands at 4.78% and is set to gradually decrease 15% after each 180-epoch period, according to Mitrade Insights. That represents over $5 billion worth of SOL per year at current prices.

The proposal underscores a need for Solana to evolve as more experts introduce their own ideas for optimizing the network. It also highlights concerns about inflationary pressures on Solana’s SOL token.

The Proposal

In the proposal, Jain pointed out Solana's growing economic activity, with stakers increasingly earning SOL through mechanisms like Miner Extractable Value (MEV). Given this development, Jain suggests transitioning from a fixed-schedule emission model to a programmatic, market driven approach.

“The purpose of token emissions in Proof of Stake networks is to attract stakers and validators to secure the network,” Jain’s supplementary post on X reads. “Therefore, the most efficient amount of token issuance is the lowest rate possible necessary to secure the network.”

As Solana’s economic activity continues to expand, transitioning to a “smart emissions” model could enhance the network’s monetary policy, Jain explained. This would work by allowing emissions to adjust dynamically—ramping up when staking participation declines to ensure network security and scaling back to minimal levels when participation is sufficient.

“Historically, issuance curves have remained static due to Bitcoin’s immutability ethos—a ‘Bitcoin Hangover,’” Jain’s post concluded. “While immutability suits Bitcoin’s mission to become digital gold, it doesn’t map to Solana’s mission to synchronize the world’s state at lightspeed.”

Solana Mania

As the Solana ecosystem continues to grow, several proposed upgrades have been introduced, with one titled SIMD-215 recently taking center stage on Jan. 6.

SIMD-215 lists its main goal as scaling Solana to “billions of accounts and computing a ‘hash of all accounts’ in practical time and space.”

In May 2024, Solana governance approved SIMD-0096, which removed the 50% burn mechanism on validator priority fees. This change now directs 100% of the fees to block producers, aiming to streamline fee allocation across the network.