Solana Prepares for Supply-Reducing Protocol-Level Updates

Solana's proposed protocol-level updates aim to reduce new token supply and improve staking.

The three Solana Improvement Documents (SIDMs) target different aspects of the network, but all are intended to manage SOL supply over time.

According to data shared by DeFi Dev Corp., around 60,000 SOL tokens are created every day, while only about 650 SOL is burned. This gap has led to a faster growth in new supply than tokens removed from circulation.

The first proposal, SIMD-550, would accelerate Solana's inflation-reduction plan, moving toward a long-term rate of 1.5 percent. The second proposal, SIMD-123, allows validator-managed staking pools for large investors. The third proposal, SIMD-553, changes transaction fees to be burned based on computing resources used.

Combined, the proposals could bring net new SOL issuance close to zero and increase daily burns from 650 to between 7,500 and 9,000 SOL tokens.