Galaxy proposes consensus method to address Solana inflation debate

Galaxy Research has submitted a new proposal to the Solana (SOL) community to reform the network’s inflation governance discussion through a method called Multiple Election Stake-Weight Aggregation (MESA), according to a filing published on April 17. 

The mechanism seeks to introduce a market-driven process to refine the SOL emissions curve without relying on single-outcome votes.

The proposed method would not change Solana’s ultimate goal of reaching a 1.5% terminal inflation rate but could substantially accelerate the timeline, depending on the outcome of the community’s vote. 

According to Galaxy’s projections, maintaining the current 15% deflation rate would see the network reach its terminal rate around epoch 2,135, approximately 7.4 epoch years from epoch 772. Steepening the deflation rate would bring this point closer.

Addressing inflation

Concerns about Solana’s inflation have further intensified this year. The network’s annualized inflation rate rose by 30.5% after implementing a new priority fee distribution mechanism under Solana Improvement Document 96 (SIMD-96), approved in May 2024. 

This change redirected all priority fees to validators instead of burning half, which reduced the daily Solana burn from nearly 18,000 SOL to around 1,000 SOL. 

Under the current Solana system, inflation follows a fixed, time-dependent curve that targets a 1.5% terminal inflation rate. However, Galaxy noted that prior votes, such as Solana Improvement Document 228 (SIMD-228), revealed challenges in reaching a consensus on adjusting parameters despite broad agreement that inflation is higher than necessary.

SIMD-228 proposed dynamic inflation adjustments based on staking participation and was ultimately rejected on March 14. It secured 61.39% approval, falling short of the 66.67% threshold required for passage.

Helius Labs CEO Mert Mumtaz commented that the vote highlighted the need for better governance tools. At the same time, Solana Labs co-founder Anatoly Yakovenko argued for the importance of active validators over passive staker participation.

MESA system

The new Galaxy proposal offers an alternative path by letting validators select from multiple predetermined deflation rates, with the outcome determined through a weighted average of these votes.

The MESA system would present validators with a range of “yes” options, such as 15%, 17.5%, 20%, and 25% deflation rates, in addition to the standard “abstain” and “no” choices. 

Each validator would allocate their stake-weighted votes accordingly. If the “yes” votes meet the quorum and minimum threshold, it will trigger a calculation of the new deflation rate as the weighted average across all “yes” selections. 

This approach aims to preserve predictability while allowing validators to express a wider range of preferences in a single process. The research team also clarified that the filing is intended to suggest a governance framework and not advocate for any particular inflation rate.

Tiered decision

Instead of dynamically adjusting inflation based on real-time metrics, the MESA vote would enforce a fixed disinflationary trajectory, with the rate adjusted based on the collective input of validators once it is ratified.

The proposal also outlines several implementation questions for the Solana community to address. 

These include determining how granular the spectrum of “yes” votes should be, whether to apply the existing 33% quorum and two-thirds supermajority thresholds from SIMD-228, and whether a simple weighted average is the most appropriate calculation method.

Furthermore, Galaxy’s filing presents various hypothetical voting outcomes to illustrate the process. In one example, if 5% of YES votes select to maintain the current 15% deflation rate, 50% choose a 30% deflation rate, and 45% opt for a 33% deflation rate, the new effective rate would be 30.6%. 

The system allows validators to express nuanced preferences while avoiding the inefficiencies of repeated binary votes.

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