Ethereum, Solana inflation proposals target 50% staking threshold

EIP-8363 would burn Ethereum validator rewards to 100% at 60.25 million staked ETH, while Solana's SIMD-0550 doubles annual disinflation to 30%.

Galaxy Research Vice President Lucas Tcheyan said on Aug. 7 that both networks are confronting the same policy question: how much issuance is needed to pay for network security, and when does that security budget become more costly than useful. Neither blockchain has approved an inflation change.

Galaxy estimated consensus-layer yield on Ethereum would fall from about 2.6% to 1.2% with roughly one-third of ETH staked under the full EIP-8363 design. MEV and priority fees would remain outside the proposed burn. The EIP-8363 pull request remained open as of Aug. 9, with an editor requesting changes on Aug. 6. On Solana, SGP-0002 and SGP-0003 each secured support from at least 15% of active stake, advancing under the network's onchain governance process.

The proposals carry significant implications for staking economics and DeFi markets. Ethereum's LST loop — where ETH-denominated loans account for 28% of the active loan base across mainnet lending protocols — depends on staking yield for carry. A cut to roughly 1.2% could reduce the appeal of looping strategies on Aave, Spark, and Morpho, which hold over $4.4 billion in outstanding ETH-denominated loans, more than 90% of it borrowed against LST collateral.

SharpLink CEO Joseph Chalom, a former BlackRock executive, opposed EIP-8363 on Aug. 7, arguing lower staking returns could make ETH less attractive to institutions and raise financing costs in DeFi. "EIP-8363 does not redirect that value. It destroys it," he said. "In fact, it could lead to institutions selling ETH as they unstake it."

Supporters counter that Ethereum may be overpaying for security. Issuance currently supplies 70-80% of validator revenue, and the staking ratio has risen steadily since the switch to proof-of-stake despite falling yields. Messari analysts noted Ethereum's issuance is already low at about 0.85% per year, and rated the proposal's odds of passing as low.

Solana's parallel path

On Solana, SIMD-0553 would add an inclusion fee and a resource-based fee tied to transaction resource use, with the resource component burned in full. Galaxy cited estimates that daily burns could rise from roughly 650 SOL to between 7,500 and 9,000 SOL under recent network conditions, though the author has since published revised optimistic and pessimistic bounds.

Solana's governance process requires For votes to represent at least 66.67% of decisive stake. The earlier SIMD-0228 failed in March 2025 despite 61.39% support because it did not reach the two-thirds threshold.

Ethereum developers will continue reviewing EIP-8363 for potential inclusion in the Hegotá upgrade, though the Aug. 6 All Core Developers Consensus meeting was not a decision to include or schedule the proposal. Solana's SGP-0002 and SGP-0003 must complete a seven-epoch discussion period, a stake snapshot, and three voting epochs before any direction is accepted.

Galaxy's broader view is that both communities are reassessing the price they pay for security as their networks mature. Lower issuance may improve scarcity at the margin, but demand for blockspace and applications remains the stronger long-term driver of token value.

This article is for informational purposes only and does not constitute investment advice.