Final Inflation Parameter Proposal and Steps to Implementation

Hi Validators,

The Solana Foundation is excited to present the final inflation parameter proposal! The roadmap toward implementation is presented below along with a description of a new voting mechanism that enables stake-weighted validator voting in order to accept these final inflation parameters on Mainnet Beta.

Proposed Inflation Parameters

A full summary/accounting of the inflation research done to date along with the various considerations, parameter simulations and relevant community discussions can be found here. Based on this work and the subsequent community discussions, the Solana Foundation proposes the following Inflation Schedule parameters:

Initial Inflation Rate: 8\%
Dis-inflation Rate: -15\%
Long-term Inflation Rate: 1.5\%

These parameters define the proposed Inflation Schedule and have been thoroughly explored as outlined in the aforementioned post. To recap terminology:

  • Inflation Rate: The annualized growth rate of the Total Current Supply at any point in time.
  • Initial Inflation Rate: The starting Inflation Rate for when inflation is first enabled. The token issuance rate can only decrease from this amount.
  • Dis-inflation Rate: The annualized rate at which the Inflation Rate is reduced
  • Long-term Inflation Rate: The stable, long-term Inflation Rate to be expected

Below we show implications of these inflation parameters (reproduced from here). These plots only show the impact of inflation issuances given the Inflation Schedule as parameterized above. They do not account for other factors that may impact the Total Supply such as fee/rent burning, slashing or other unforeseen future token destruction events. Therefore, what is presented here is an upper limit on the amount of SOL issued via inflation.

The expected Staking Yield and Adjusted Staking Yield metrics are then primarily a function of the % of total SOL staked on the network, which is shown segmented in the plots below.

Dashboard

These plots are available for further inspection here.

Next Steps

To date, the Solana Foundation has driven the research to arrive at the inflation parameters proposed here, however it is ultimately up to the Solana community to accept and implement this proposal. This will be done by a vote, executed by the network validators, with each validator’s vote-weight proportional to its stake-weight.

I.e. If you want inflation - you have to vote for it!

There are four steps on the path to enabling full inflation on Mainnet Beta, each step will be approved via community vote:

  1. Vote to re-enable pico-inflation (0.01% inflation rate) on Testnet ~ Monday 11/23
  2. Vote to enable full-inflation (the parameters proposed above) on Testnet ~ Monday 11/30
  3. Vote to enable pico-inflation on Mainnet Beta ~ Monday 12/7
  4. Vote to enable full-inflation on Mainnet Beta ~ Monday 12/21

Each proposed vote will have a threshold of fractional stake weight that must be met to approve and enable the related feature (e.g. \geq 67\% of stake must vote to approve). That threshold is configurable upon the creation of the proposal. Once a vote reaches the desired threshold, the feature will be automatically enabled at the beginning of the following epoch. More details outlining the Feature Proposal Program voting process can be found here

The above dates are our best estimates but may be subject to change. The voting process, details and timelines for each step above will be communicated in #validator-announcements and the relevant network sub-channels in Discord prior to the voting event so stay tuned!

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A quick clarification, should we expect an inflation proposal token generated and distributed on Monday 11/23 for us to further cast our vote so as to enable the feature on-chain?

Reference: https://spl.solana.com/feature-proposal

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Hi @pkrasam, good question! These dates are rough estimates of when the vote might occur. So the voting token generation and distribution should happen in advance, along with the details of each particular vote. Hopefully we’ll have info out about the pico-inflation vote on Testnet soon!