What SIMD-0228 failing means for Solana

BWR analyst Carlos Gonzalez Campo explains the consequences of SOL inflation and transfers lost to “leaky buckets”

article-image

Shizume/Shutterstock modified by Blockworks

share

This is a segment from the Empire newsletter. To read full editions, subscribe.


We don’t really talk about SOL too much at Empire. Part of that is because, obviously, Blockworks already has a whole newsletter and podcast dedicated to it, and Jeff and Jack are far better at discussing Solana. I’d even go so far as to say Jack’s sense of humor rivals mine… But I’m not sure I want him to hold that over my head. 

Loading Tweet..

Anyway, I took a shallow dive down the SIMD-0228 lane, as I was curious to see what has some folks up in arms about the proposal. 

(If you’re nosy like me, you can also check out Jeff and Jack’s reporting on the SIMD here.)

Thankfully, I didn’t have to dig too deep before Blockworks Research’s Carlos Gonzalez Campo picked up the phone and filled me in.

Basically: Solana’s inflation rate sits at 4.6% right now, which — some argue — is too high. It’s set at 8% to start, with a yearly decrease of 15% (with a terminal rate of 1.5% in 2030). 

The resolution didn’t pass with the vote closing late last night, though Gonzalez Campo was leaning in favor of the proposal because he thought that the benefits outweighed the potential concerns.  

When asked what it means for SOL, Gonzalez Campo told me: “You continue to overpay for security and dilute naked SOL holders. SOL emissions also add selling pressure through what Max Resnick calls the ‘leaky bucket,’ defined as transfers lost due to taxes or middlemen with market power (e.g., validators like Coinbase or Binance that charge high commissions).”

The other side, he added, is that the so-called leaky bucket can be “viewed as a distribution spend, especially to institutions” which take a percentage of the staking yield but aren’t exposed to the underlying asset. 

So that’s your snapshot into Solanaland. If you want something more in depth, may I recommend the Lightspeed newsletter this afternoon?


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template Presentation.jpg

Research

The Solana validator landscape has changed drastically over the past year. The chain now has 1,332 active validators with 380.9 million SOL staked (63.9% of supply) as of February 2025. Validator revenue had diversified beyond inflationary rewards (still making up 55%) to include Jito tips (30%), priority fees (24%), and base fees (<1%), in January, especially with the increased activity on Solana. Since then, issuance has become dominant again (76%), while Jito tips (14%), priority fees (9%), and base fees (less than 1%) have reduced in share of February 2025. There has been a strong shift towards non-inflationary revenue sources, which have become more central to validator economics as priority fees and off-chain blockspace auctions gain traction. Client diversity has also improved drastically, with implementations such as Agave, Jito-Solana, and Frankendancer already in use, and upcoming clients like Firedancer and Sig expected to further strengthen resilience and reduce reliance on a single codebase.

article-image

BWR analyst Carlos Gonzalez Campo explains the consequences of SOL inflation and transfers lost to “leaky buckets”

article-image

Empire co-host Santiago Santos makes the case that memecoins have actually helped push infra forward…just not in the way you think

article-image

A16z Crypto lists seven buckets for tokens and recommendations for how to regulate them, in a filing submitted to the SEC

article-image

New model aims to resolve trading inefficiencies with a single execution layer and market maker changes

article-image

Investors navigating BTC face short-term unpredictability, influence from other markets

article-image

The GENIUS Act aims to establish regulatory guidelines for stablecoins