Galaxy proposes a new mechanism to help Solana resolve inflation disputes.

According to the document published on April 17, Galaxy Research has submitted a new proposal to the Solana community to reform the network's inflation governance mechanism, through the Multiple Election Stake-Weight Aggregation method (MESA).

This mechanism aims to introduce a process for adjusting the issuance curve of Solana (SOL) based on market orientation, rather than relying on individual vote outcomes.

The proposed method will not change Solana's ultimate goal of achieving a terminal inflation rate of 1.5%, but it may significantly shorten the time to reach that goal, depending on the voting results from the community.

According to Galaxy's forecast, if the current deflation rate of 15% is maintained, the network will reach the final inflation level around epoch 2,135, which is about 7.4 years from epoch 772. If the slope of the deflation rate is increased, this time will be shortened.

Solana deflationary curve | Source: Galaxy## Addressing the inflation issue

Concerns about Solana's inflation have increased this year. The annual inflation rate of the network rose by 30.5% after the implementation of the new priority fee distribution mechanism according to the Solana Improvement Document 96 (SIMD-96), which was approved in May 2024.

This change shifts the entire priority fee to validators instead of burning half as before, resulting in a significant decrease in the amount of SOL burned daily – from nearly 18,000 SOL to only about 1,000 SOL.

Under Solana's current mechanism, inflation follows a fixed curve over time, aiming for an end-of-period inflation rate of 1.5%. However, Galaxy notes that past votes — such as Solana Improvement Document 228 (SIMD-228) — show that reaching consensus on adjusting the parameters is difficult, although most agree the current level of inflation is too high.

The SIMD-228 proposal previously introduced a flexible inflation adjustment mechanism based on the staking participation rate, but was ultimately rejected on March 14. The proposal received 61.39% approval votes, but still did not reach the minimum of 66.67% required for approval.

The CEO of Helius Labs, Mert Mumtaz, believes that this vote underscores the need for better governance tools. Meanwhile, the co-founder of Solana Labs, Anatoly Yakovenko, argues that active validators should be prioritized over passive stakers.

MESA System

The new proposal from Galaxy presents a different approach, allowing validators to choose from multiple preset deflationary levels, with the final outcome calculated based on the weighted average of the votes.

The MESA system will provide validators with multiple different "agree" options – such as deflation rates of 15%, 17.5%, 20%, and 25% – alongside the options of "no" and "abstain."

Each validator will allocate their voting rights according to the weight of their stake. If the total number of "yes" votes reaches a sufficient participation rate and minimum threshold, the system will calculate the new inflation rate based on the weighted average of the "yes" choices.

This approach aims to maintain the predictability of the system while allowing validators to express a wider range of views in a single vote. The research team also clarified that this proposal is intended only to suggest a governance framework and does not lean towards any specific level of inflation.

Layering Decision

Instead of adjusting inflation flexibly based on real-time indicators, the MESA voting mechanism will apply a fixed deflationary roadmap, with the rate adjusted based on the collective opinion of validators after the proposal is passed.

The proposal also raises some questions that the Solana community needs to discuss further, including: the level of detail of the "agree" options, whether to reapply the 33% participation threshold and the supermajority of 2/3 (66.67%) as in the SIMD-228 proposal, and whether the simple weighted average method is the most appropriate calculation method?

In addition, Galaxy also provided some hypothetical scenarios to illustrate how the system operates. For example, if 5% of the "agree" votes choose to maintain the current deflation rate of 15%, 50% choose a deflation rate of 30%, and 45% choose a deflation rate of 33%, then the new effective deflation rate will be 30.6% calculated based on the weighted average.

This system allows validators to express more detailed perspectives, while also avoiding the inefficiencies of repeated binary voting.

Disclaimer*: This article is for informational purposes only and is not investment advice. Investors should do thorough research before making decisions. We are not responsible for your investment decisions*

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