What SIMD-0228 failing means for Solana

BWR analyst Carlos Gonzalez Campo explains the consequences of SOL inflation and transfers lost to “leaky buckets”

March 14, 2025 12:16 pm

Shizume/Shutterstock modified by Blockworks

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We don’t really talk about SOL too much at Empire. Part of that is because, obviously, Blockworks already has a whole newsletter and podcast dedicated to it, and Jeff and Jack are far better at discussing Solana. I’d even go so far as to say Jack’s sense of humor rivals mine… But I’m not sure I want him to hold that over my head.

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Anyway, I took a shallow dive down the SIMD-0228 lane, as I was curious to see what has some folks up in arms about the proposal.

(If you’re nosy like me, you can also check out Jeff and Jack’s reporting on the SIMD here.)

Thankfully, I didn’t have to dig too deep before Blockworks Research’s Carlos Gonzalez Campo picked up the phone and filled me in.

Basically: Solana’s inflation rate sits at 4.6% right now, which — some argue — is too high. It’s set at 8% to start, with a yearly decrease of 15% (with a terminal rate of 1.5% in 2030).

The resolution didn’t pass with the vote closing late last night, though Gonzalez Campo was leaning in favor of the proposal because he thought that the benefits outweighed the potential concerns.

When asked what it means for SOL, Gonzalez Campo told me: “You continue to overpay for security and dilute naked SOL holders. SOL emissions also add selling pressure through what Max Resnick calls the ‘leaky bucket,’ defined as transfers lost due to taxes or middlemen with market power (e.g., validators like Coinbase or Binance that charge high commissions).”

The other side, he added, is that the so-called leaky bucket can be “viewed as a distribution spend, especially to institutions” which take a percentage of the staking yield but aren’t exposed to the underlying asset.

So that’s your snapshot into Solanaland. If you want something more in depth, may I recommend the Lightspeed newsletter this afternoon?

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