Asset management firm 21Shares stated that Solana is advancing two token economic adjustments, SIMD-550 and SIMD-553: the former accelerates inflation reduction, while the latter increases SOL burn through financial activity calculation unit fees. If both proposals are implemented, it is expected to reduce SOL issuance by approximately $1.4 to $1.5 billion over six years.

SIMD-550, proposed by Helius, aims to increase the annual inflation reduction rate from 15% to 30%, compressing the time to reach a terminal inflation rate of 1.5% from about 5.7 years to 2.8 years, moving the target date from the first half of 2032 to the first half of 2029. This proposal entered governance voting on August 23 and has not yet been finalized.

According to 21Shares' estimates, SIMD-550 would reduce the current nominal staking yield of about 5.47% to approximately 4.34% in the first year, about 3% in the second year, and about 2.25% in the third year. The decline in yield comes from the reduction in protocol inflation issuance received by validators, but does not necessarily mean that all stakers' actual returns will decline by the same proportion, as MEV, priority fees, and validator commissions will still affect final returns.

SIMD-553, proposed by Temporal, was approved on July 20 and merged into the codebase. It introduces resource-based burn fees for financial activity applications, linking SOL burn directly to on-chain financial activities. Merging the code does not mean it is fully activated in the mainnet parameters; the specific execution pace still depends on network upgrades and governance processes.

Based on current network activity estimates, SIMD-553 could increase the daily SOL burn from about 600 to 800 SOL to 7,500 to 9,000 SOL, approximately ten times the current level, corresponding to a daily burn value of about $712,500 to $855,000. Even so, the burn amount would still only account for about 12% to 15% of daily inflation issuance, which is insufficient to bring SOL into net deflation.

The two proposals jointly change the distribution of "staking yield - supply growth - on-chain usage": SIMD-550 directly reduces future new SOL supply, while SIMD-553 allows high-frequency financial activities to generate higher burns. 21Shares believes this will roughly halve staking yields within two years and drive some SOL from high-staking status to DeFi, liquid staking, lending, and other on-chain uses.

Validator income will face pressure. 21Shares estimates that under the SIMD-550 scenario, about 2 out of 738 validators may turn to losses in the first year, potentially increasing to 30 by the third year; if the voting fees related to SIMD-553 adopt a higher cost design, validator voting expenses could rise to about 21 times the current level. The fee parameters and final economic model have yet to be determined.

From a market mechanism perspective, reduced issuance and increased burns will lower future net supply growth of SOL, but prices will not automatically rise due to token reductions. If staking yields decline and MEV and priority fees do not increase by about 55% to 95% to make up for lost income, low-profit validators may exit, and staking delegation and validation weight may concentrate towards large operators; beneficiaries will be efficient validators, liquid staking protocols, DeFi applications, and high-usage on-chain financial products, while small validators relying on high protocol issuance subsidies will be under pressure.

Source: Public Information