With the upcoming vote on SIMD-0228 - an improvement proposal about Solana's staking and inflation model, we held a town hall on it. Our goal was to engage validators and stake delegators in a conversation about the implications of the proposal, which suggests altering the inflation curve to address perceived inefficiencies in Solana's current staking rewards system.
We had the SIMD co-authors Vishal Kankani and Tushar Jain from Multicoin Capital on the call, and ended up having a spirited but constructive discussion with all of the validator node operators and stakers who tuned in.
We covered multiple topics, like:
- The purpose of inflation in blockchain:
- Inflation is used to bootstrap economic activity in the blockchain ecosystem.
- Current inflation is perceived as high compared to other networks like Ethereum.
- Proposed changes in SIMD 228:
- The proposal suggests a new inflation model to reduce emissions, making it more market-based.
- Aims to decrease inflation to reduce unnecessary emissions and make the asset more attractive.
- Concerns and considerations:
- Potential impact on small validators and the overall number of validators.
- The need for a balance between maintaining network security and reducing inflation.
- The implication of tax treatments and how it might affect investors' behavior.
- Governance and voting:
- The proposal is a signalling vote meant to guide future technical implementations.
- Validators have the responsibility to represent stakers' interests.
Key points and insight
- Economic considerations
- The proposal addresses the economic inefficiency of high inflation and aims to align Solana's emissions with market activities.
- Stakeholder engagement was emphasized, highlighting the importance of involving delegators and seeking their opinion on proposals that impact them directly.
- Stakeholder engagement
- The discussion emphasized the importance of involving delegators and seeking their opinion on proposals that impact them directly.
- Implementation and timing
- The implementation of SIMD 228 is expected to take time, with a possible timeline stretching into the next year.
- Future proposal amendments
- There is room for amendments to the proposal based on community feedback, such as reducing vote fees and considering validator impacts.
Discussion Highlights
- Validator and delegator dynamics: Validators discussed their role in representing delegators and the complexities of doing so without direct communication channels, and the fiduciary duty they have to stakers.
- Market-based adjustments: Several iterations of the inflation formula were discussed, with a focus on making it responsive to market demands.
- Potential outcomes: The discussion acknowledged various potential outcomes, including shifts in staking behaviors and DeFi participation.
- Next steps: The conversation is set to continue with further discussions in other forums and spaces, allowing for ongoing community input and refinement of the proposal.
Conclusion
The Twitter Space discussion on SIMD-0228 provided a comprehensive overview of the proposal's aims, concerns, and potential impacts. Key insights included the economic considerations of reducing inflation, the importance of stakeholder engagement, and the future steps for implementation.
The discussion underscored the significance of ongoing community involvement and the need for a balanced approach to ensure the network's security and attractiveness. The conversation will continue, allowing for further refinement and input from delegators and stakers, ensuring a robust and informed decision-making process.
Are you a delegator who wants to share an opinion on SIMD-0228? Get in touch with us on Twitter/X!