Galaxy says Ethereum, Solana may rethink token inflation models

Galaxy Research Vice President Lucas Tcheyan said on Aug. 7 that Ethereum and Solana are confronting a similar policy question: how much token issuance is needed to pay for network security, and when does that security budget become more costly than useful? The debate is moving through proposal processes on both networks, but neither blockchain has approved an inflation change.

One important update concerns Ethereum’s proposal number. Galaxy initially referred to the Tapered Issuance Burn proposal as EIP-8361. Ethereum’s EIP editors later assigned it EIP-8363 because EIP-8361 had already been allocated elsewhere. The EIP-8363 pull request remained open as of Aug. 9, and an editor requested changes on Aug. 6.

Ethereum proposal would taper rewards as more ETH is staked

EIP-8363 would burn a growing share of consensus layer validator rewards as Ethereum’s staking ratio rises. The burn fraction would reach 100% around a 50% staking ratio, removing new issuance as an incentive for additional staking beyond that level. The authors propose an 18 month transition because applying the full mechanism immediately would sharply reduce validator returns.

Galaxy estimated that, with roughly one third of ETH staked, consensus layer yield would fall from about 2.6% to 1.2% under the full design. MEV and priority fees would remain outside the proposed burn. Those figures describe a modeled outcome, not an approved change to Ethereum’s monetary policy.

The Aug. 6 All Core Developers Consensus agenda listed Tapered Issuance Burn among proposals being considered for Hegotá. The agenda explicitly said the meeting was not a decision to include or schedule those proposals. No network vote or activation date has been set.

Meanwhile, SharpLink CEO Joseph Chalom opposed the issuance change, arguing lower staking returns could make ETH less attractive to institutions and raise financing costs in DeFi. Those outcomes remain forecasts. As crypto.news previously reported, supporters instead argue Ethereum may be paying more issuance than necessary as staked ETH rises.

Solana proposals target emissions and transaction burns

Solana is considering two separate changes. SIMD-0550 would double annual disinflation from 15% to 30% while keeping the terminal inflation floor at 1.5%. The technical proposal was merged into Solana’s improvement document repository on July 23 with Review status, but that does not activate the change.

SGP-0002 asks validators and delegators whether Solana should pursue the faster schedule. Its authors estimate the change would bring the terminal rate forward from about 5.7 years to 2.8 years and produce roughly 18.9 million fewer SOL in emissions over six years. The “18.9 million SOL” reduction is a projection, not a guaranteed change in supply.

SGP-0003 addresses fees. It backs SIMD-0553, which would add an inclusion fee and a resource based fee tied to transaction resource use, with the resource component burned in full. Galaxy cited estimates that daily burns could rise from roughly 650 SOL to between 7,500 and 9,000 SOL under recent network conditions.

However, the burn estimate is already being refined. On Aug. 9, SIMD-0553 author cavemanloverboy said he had been told earlier estimates were “misleading” and published optimistic and pessimistic bounds using the previous month’s traffic. He also noted that contract optimization and other behavioral changes could reduce future burns, meaning the eventual level cannot be treated as fixed.

Solana governance still stands between proposals and activation

Galaxy said SGP-0002 and SGP-0003 each secured support from at least 15% of active stake, enough to advance under Solana’s new onchain governance process. Under the official governance rules, reaching that threshold starts an 11 epoch sequence: seven epochs for discussion, one for a stake snapshot and three for voting.

A proposal passes only if For votes represent at least 66.67% of decisive stake, meaning For plus Against votes. Abstentions are excluded, and there is no separate quorum requirement. Even a successful SGP is a directional mandate rather than automatic code activation; the associated SIMD still needs development and feature gate deployment.

The process follows Solana’s earlier difficulty in changing inflation. SIMD-0228 failed in March 2025 despite 61.39% support because it did not reach the required two thirds approval level. More recently, Solana introduced its SGP framework to separate stake weighted policy signals from technical SIMD review.

What happens next for Ethereum and Solana inflation

Ethereum developers will continue reviewing EIP-8363 and deciding whether it should progress toward Hegotá. The proposal remains an open pull request, and the Aug. 6 developer meeting treated it only as a candidate for further consideration. Any adoption would require more review, agreement on upgrade inclusion and client implementation.

Solana’s path is tied to its governance clock. SGP-0002 and SGP-0003 must complete discussion, stake snapshot and voting stages before either direction is accepted. Technical activation would follow separately. For now, the proposals alter expectations about future ETH and SOL supply rather than either network’s current issuance rules.

Galaxy’s broader view is that both communities are reassessing the price they pay for security as their networks mature. The firm argues lower issuance may improve scarcity at the margin, but demand for blockspace and applications remains the stronger long term driver of token value. With no final decision, any repricing of future supply remains dependent on proposals still under debate.