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SIMD-228: A Critical Analysis

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SIMD-228: Market-Based Emission Mechanism is a Solana Improvement Document (SIMD) proposed by Tushar Jain, Vishal Kankani of Multicoin Capital, and Max Resnick of Anza. It aims to introduce a market-based inflation mechanism by replacing the current fixed disinflation schedule with a dynamic model more responsive to network participation. Solana’s current inflation operates under a fixed model that begins at 8% annually, decreasing by 15% each year until it reaches a floor of 1.5%. It currently stands at ~4.68%. Solana’s current inflation schedule SIMD-228 seeks to replace this with a formula that adjusts inflation dynamically based on the staking rate (i.e., the fraction of SOL tokens staked by validators) using the formula: i(s) = r * (1 - √s + c * max(1 - √(2s), 0)), where: To ensure a smooth transition from the current to the proposed schedule, SIMD-228 proposes interpolating between the old and new rates over 50 epochs using the formula: i(s) = r * (1 - 𝛼√s + 𝛼c * max(1 - √(2s),

Blog / Research SIMD-228: A Critical Analysis 0xIchigo Developer Experience Engineer 0xIchigo on X 0xIchigo on LinkedIn Lostin Researcher Lostin on X 25 min read March 4, 2025 Table of Contents Thank you to Brady , Mert , Guney , Koen , Vishal , and Max , for reviewing earlier drafts of this report. Actionable Insights Solana’s current inflation schedule operates under a fixed time-based model that begins at 8% annually and decreases by 15% yearly until it reaches a floor of 1.5%. Inflation currently stands at ~4.68%. SIMD-228 seeks to replace this with a formula that adjusts inflation dynamic

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