Galaxy says Ethereum, Solana may rethink token inflation models
Two of crypto’s biggest proof-of-stake (PoS) networks are asking the same blunt question: how much issuance is actually paying for security, and how much is just dilution dressed up as policy?
- Ethereum: a proposal would reduce validator issuance as staking rises.
- Solana: proposals target faster disinflation and a new fee-burning setup.
- Nothing is final: both networks are still in proposal and governance stages.
Galaxy Research says both networks are now testing whether their token economics still make sense as they mature. That is the part too many people brush past. In proof-of-stake systems, issuance is a security budget. New tokens are printed to reward validators for protecting the chain. Cut that budget too hard and incentives get thin. Keep it too fat and holders get diluted for no good reason. Crypto loves hard money until it has to pay the security bill.
Galaxy Research Vice President Lucas Tcheyan commented on the issue on Aug. 7, framing the discussion around whether current issuance levels are still justified as networks grow older and more stable.
Ethereum’s proposal would taper issuance as staking rises
On Ethereum, the debate centers on EIP-8363, a proposal that was first referred to as EIP-8361 before the number was reassigned because that identifier was already taken. As of Aug. 9, the EIP-8363 pull request was still open, and an editor requested changes on Aug. 6.
The idea is to burn a growing share of consensus layer validator rewards as the staking ratio increases. In plain English, the more ETH that is already helping secure the network, the less new ETH the protocol would pay out on that layer. Under the proposal, the burn fraction would eventually reach 100% at around a 50% staking ratio.
That does not mean validators would have no reason to stake. MEV and priority fees would still remain outside the proposed burn. MEV, or maximal extractable value, is the extra profit validators can earn from transaction ordering. Priority fees are the extra fees users pay to get picked up sooner. Those revenue streams still matter a lot.
Galaxy estimated that with roughly one-third of ETH staked, consensus layer yield would fall from about 2.6% to 1.2% under the proposal. That is a projection, not a guarantee, but it shows the direction of travel: less issuance, leaner staking rewards, tighter monetary policy.
The transition would run for an estimated 18 months.
Governance is still in the weeds. The Aug. 6 All Core Developers Consensus agenda listed the proposal among items being considered for Hegotá, but the agenda also made clear that this was not a decision to include or schedule it. No network vote or activation date has been set.
That distinction matters. In crypto, “being discussed” often gets treated like “approved by the gods.” It is not. There is a large gap between a proposal surviving review and code actually changing mainnet economics.
SharpLink CEO Joseph Chalom opposed the change, arguing that lower staking returns could make ETH less attractive to some institutional allocators and raise financing costs in DeFi. That concern is not nonsense. If ETH staking yields fall too far, the carry trade gets weaker and some capital may decide the risk is no longer worth the juice.
But the bull case is just as obvious: if Ethereum can reduce issuance without damaging validator participation, ETH gets a cleaner monetary profile. For a network that already leans heavily on scarcity narratives, that is not trivial.
Solana is tackling both inflation and fees
Solana’s debate is broader. It is not just about how fast new SOL gets created. It is also about how fees are structured and how much of that activity should be burned rather than paid out.
The main inflation proposal, SIMD-0550, would double annual disinflation from 15% to 30% while keeping the terminal inflation floor at 1.5%. That means Solana would still trend toward the same long-term floor, but it would get there faster. The proposal was merged into Solana’s improvement document repository on July 23 with Review status.
Another proposal, SGP-0002, asks validators and delegators whether Solana should pursue that faster disinflation path. Its authors estimate the terminal rate would arrive in 2.8 years instead of about 5.7 years, which would mean roughly 18.9 million fewer SOL in emissions over six years.
There is also SGP-0003, which backs SIMD-0553. That proposal would add an inclusion fee and a resource based fee tied to how much network resource a transaction consumes. The resource component would be burned in full.
That fee model is where forecasts start to wobble. Galaxy cited estimates that daily burns could rise from roughly 650 SOL to between 7, 500 and 9, 000 SOL. But on Aug. 9, cavemanloverboy said earlier estimates were “misleading” and published optimistic and pessimistic bounds using the previous month’s traffic.
He also said contract optimization and other behavioral changes could reduce future burns. That is the part people love to ignore when they get excited about fee projections: once the rules change, users adapt, bots adapt, and developers start shaving every possible unit of waste off their transactions. Fee models are not static. They change behavior.
How Solana’s governance process works
Galaxy said both SGP-0002 and SGP-0003 had secured support from at least 15% of active stake, which is enough to start Solana’s formal governance sequence. An epoch is a fixed period in Solana’s validator cycle, and the sequence runs for 11 epochs: 7 epochs of discussion, 1 epoch for a stake snapshot, and 3 epochs of voting.
A proposal passes only if For votes make up at least 66.67% of decisive stake. Abstentions are excluded, and there is no separate quorum requirement.
That means you do not need every validator to show up. But you do need a strong supermajority of the stake that actually votes. Online enthusiasm is cheap. On-chain support is what counts.
The failed SIMD-0228 vote in March 2025 is a useful reminder. It received 61.39% support, which sounds pretty decent until you remember the bar was two-thirds. Close does not cut it in governance. The chain is not impressed by almost.
Why this matters
Both Ethereum and Solana are running into the same mature-network problem: do you keep paying validators with generous issuance, or do you tighten monetary policy and rely more on fees, MEV, and actual usage?
If issuance stays too high, token holders eat dilution and the asset can look sloppy as a store of value. If issuance gets cut too fast, validator economics can weaken and security may end up leaning too hard on fee revenue or pure optimism that enough stakers will stick around anyway.
That tradeoff is not abstract. On Ethereum, staking already sits at the center of the network’s money story, so changes to issuance have direct implications for ETH’s yield profile and market narrative. On Solana, the discussion is even messier because inflation, fee design, throughput, and validator incentives all collide at once.
Neither chain has approved a final inflation change. Both are still working through proposals, governance, and the usual political sludge that comes with changing the rules of money on a public blockchain.
Key questions and takeaways
-
Are Ethereum and Solana changing inflation right now?
No. Both networks are still in proposal and review stages, and neither has approved a final change. -
What is Ethereum trying to do?
Ethereum’s proposal would reduce newly issued rewards on the consensus layer as staking rises, eventually burning that issuance entirely at around a 50% staking ratio. -
What is Solana trying to do?
Solana is considering faster disinflation and a fee redesign that adds inclusion and resource-based fees, with the resource portion burned fully. -
Why are people arguing about this?
Lower issuance can improve scarcity, but it can also weaken validator incentives if fees and MEV do not make up the difference. -
Are the Solana burn estimates settled?
No. Galaxy cited a high burn range, but the proposal author called earlier figures “misleading, ” and actual burn levels will depend on user behavior, transaction mix, and optimization. -
Why does Solana governance matter here?
Because proposals need real stake support and a supermajority of decisive votes, not just loud online approval. That makes passing meaningful economic changes much harder.
The bigger picture is simple: mature proof-of-stake chains are drifting toward a harder, healthier question about what they should actually pay for security. Lower issuance may mean cleaner economics. But there is no magic number that makes holders, validators, developers, and users all happy at once. Anyone promising that is selling snake oil with a fresh coat of tokenomics paint.
