Multicoin releases Solana Improvement Proposal, proposing to adjust SOL issuance rate to a market-based solution

Multicoin Capital, one of the early investors in Solana, is now trying to change the inflation mechanism of the Solana network. Tushar Jain and Vishal Kankani, two partners of Multicoin Capital, submitted a "smart issuance" proposal for Solana, proposing to adjust the issuance of SOL from the current fixed schedule to a market-based solution. Multicoin's proposal may reduce SOL inflation. In Solana terms, inflation refers to the network issuing SOL to validators who run Solana software and help build the blockchain. Validators then pass these issued SOL and some MEV (miner extractable value) rewards to stakers who delegate SOL to them. In short, Multicoin's proposal sets a target staking rate of 50% to ensure the security and decentralization of the network. If more than 50% of SOL is staked, the issuance will be reduced to reduce returns and thus discourage staking. If less than 50% of SOL is staked, the issuance will increase, increasing returns and encouraging staking. The minimum inflation rate is 0%, and the maximum is based on the current Solana issuance curve. Solana's inflation rate was initially set at 8% and will be reduced by 15% each year until it reaches an inflation rate of 1.5%. According to Solana Compass, SOL's inflation rate is currently around 4.8%. Solana co-founder Anatoly Yakovenko said in a podcast that the concept of a fixed rate was borrowed from the Cosmos blockchain and that inflation is just "accounting treatment." (Blockworks)