Solana burn proposals target 9,000 SOL daily as validators weigh cuts

Solana's SGP-0002 and SGP-0003 would double disinflation to 30 percent and burn 9,000 SOL daily, cutting staking yields to 2.2 percent.

The proposals' authors model staking yields falling from 5.8 percent today to 2.2 percent by year three, a revenue cut that would likely force many staking businesses to close, according to the governance documents.

SGP-0002 would double the annual disinflation rate to 30 percent from 15 percent, pulling the 1.5 percent inflation floor forward to 2029 from 2032. SGP-0003 would burn transaction fees in full, lifting daily coin destruction from 648 SOL to 9,000 SOL against roughly 60,000 SOL issued daily. Both proposals cleared the 15 percent stake threshold for consideration on Aug. 5, with voting running through Aug. 29.

The outcome hinges on smaller validators, who rejected a similar proposal in March 2025. SIMD-0228 won 61.4 percent of ballots cast but fell short of the two-thirds supermajority required, with validators holding under 500,000 SOL voting no in force. If the current proposals fail, Solana's bear case retains its strongest argument: holders gain little upside from network activity.

Validators Face a Pay Cut

The proposals would reshape Solana's tokenomics, which currently does not let holders capture much upside from network activity. SOL rose 3 percent in the past 24 hours as the market priced in the possibility of supply reduction. The network issues roughly 60,000 SOL daily while burning only 648 SOL through existing mechanisms.

The March 2025 vote split along validator size lines. Larger validators voted yes because they can absorb smaller reward streams, while smaller operators with under 500,000 SOL voted no in force, fearing they would go out of business. The same dynamic is at play now, with each proposal tallied separately so one could pass while the other fails.

What's at Stake for SOL

If both proposals pass, Solana would become meaningfully deflationary over time, reducing one of the strongest bear-case arguments against the token. The main risk is that lower yields discourage institutional holders from staking SOL, potentially reducing demand across the broader Solana DeFi ecosystem.

The vote closes Aug. 29. If smaller validators turn out against these proposals as they did in 2025, nothing changes, and the bear case for the coin retains its best argument: why buy a coin if holders can't benefit from its use?

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