Solana improves inflation calculation formula: SIMD-0411 plan could be a breakthrough

The Solana community has just announced an important proposal to optimize the token issuance mechanism. That is SIMD-0411 — a plan to accelerate SOL’s deflation process by adjusting the inflation formula to double the speed of reducing the inflation rate, from -15% to -30%.

What is the event? Specific changes to know

This proposal was initiated by community associates Lostin and developer Ichigo from Helius. Currently, the plan is under governance discussion and will soon move to a voting phase.

Based on current calculations, Solana’s inflation rate is 4.18% and is expected to decrease to 1.5% by early 2032. However, if the new inflation formula is applied, this period could be shortened to 2029 — meaning only 3.1 years instead of nearly a decade.

The economic impact of this is quite significant: over the next 6 years, the amount of SOL tokens issued will decrease by 22.3 million tokens (from 721.5 million tokens down to 699.2 million tokens). At the current price of approximately $139.81, this amounts to roughly $3.12 billion.

Why SIMD-0411? Lessons from the previous failure

To understand better, we need to go back to the past when early investors like Multicoin Capital proposed SIMD-0228 — a much more complex plan. That approach aimed to adjust inflation dynamically, directly linked to a target staking rate of 50%.

According to the logic of SIMD-0228: if the staking rate exceeds 50%, inflation would decrease to limit additional staking; if below 50%, inflation would increase to encourage it. Ultimately, the goal was to fix inflation at 0.87%.

But that failed because it was too complicated. Behind the debate was a conflict of interest: large validator nodes supported it because they would benefit from rising token prices, but smaller nodes feared that reduced staking rewards would make things difficult for them. DeFi projects also worried about liquidity impacts.

SIMD-0411 is considered a “lighter” version of SIMD-0228. It only changes a single parameter instead of redesigning the entire system, maintaining the final inflation target of 1.5% that has been agreed upon. This makes the plan more predictable and less risky.

What do supporters demonstrate?

The SOL fund (DFDV) publicly supported SIMD-0411 with compelling arguments:

First, from a technical perspective: the new inflation formula uses a simple parameter adjustment, avoiding complex and dynamic monetary logic, and includes a 6-month grace period for network preparation.

Second, regarding development context: Solana has moved past the phase of needing high staking yields to attract developers. Evidence is the protocol revenue increasing from $29 million (2023) to $1.42 billion (2024), and currently $1.38 billion (2025). This figure is twice that of Ethereum.

Third, from transaction data: Solana’s DEX volume has increased from $694 billion (2024) to an estimated $1.45 trillion (2025), while processing 68.6 billion transactions over the past 3 years — a 50-fold difference compared to Ethereum.

Fourth, in terms of attracting institutional investment: DAT funds, ETFs, and financial instrument issuers tend to favor assets with clear, predictable, and transparent inflation mechanisms. This could open a large source of institutional capital.

Fifth, Solana currently has support from DAT and ETF funds, totaling 25.581 million SOL (worth approximately $3.55 billion). This cash flow indicates a strong institutional buying force is forming.

Concerns are not unfounded

However, not everyone agrees. Pine Analytics predicts that if SIMD-0411 is approved, nominal staking yields will gradually decrease over the years: about 5.04% in the first year, 3.48% in the second, and 2.42% in the third.

The subsequent consequence is that some validator nodes will face difficulties. According to 0xSpade, in the first year about 10 nodes will shift from profit/break-even to loss, increasing to 27 nodes in the second year and 47 nodes in the third.

Additionally, other concerns include:

• Staking participation rate may decline, affecting economic security
• Some small nodes may have to shut down due to unprofitability
• Sudden adjustments could cause short-term market volatility
• Yields on ETF, staking, and DAT products will be impacted
• This precedent may not apply to all other networks

Preparing for the next step?

Although SOL’s price in 2024 is unremarkable, positive signs are emerging. DAT funds continue to buy in, while spot SOL ETFs have recorded a net inflow of $128 million in the recent week (as of 11/21).

Currently, the net asset value of spot SOL ETFs reaches $719 million, with a cumulative net inflow of $510 million. The ratio to Bitcoin’s market cap is 1.01%.

This is an important signal: amid widespread crypto asset sell-offs, Solana has enough institutional buying strength to make a difference.

From the perspective of Solana supporters: “Long pain is not as good as short pain.” Although decreasing staking yields may affect ETFs, “the new transparent and predictable inflation formula” will attract many more retail and institutional investors. This can fully offset the risks from those leaving due to lower yields.

Hopefully, SIMD-0411 will pass the voting round, avoiding the failure of SIMD-0228.