Ethereum and Solana are both taking a fresh look at their token issuance, or inflation, policies. Galaxy Research Vice President Lucas Tcheyan noted on August 7 that both networks are grappling with the same underlying question: how much token issuance is actually needed to secure the network, and at what point does that security budget stop being worth its cost. Ethereum’s EIP-8363 and Solana’s SIMD-0550 and SIMD-0553 are each moving through their respective proposal processes, though neither network has finalized any changes to its inflation policy yet.

The “Tapered Issuance Burn” proposal — submitted by six researchers including pintail, Jérôme de Tychey, dapplion, pa7x1, Ladislaus von Daniels, and Ethereum Foundation researcher Justin Drake — was posted as a draft on GitHub on August 4. It works by increasing the share of validator rewards that get burned as the network’s staking ratio rises; once roughly 50% of the total ETH supply is staked, 100% of rewards would be burned, effectively eliminating any further economic incentive to stake beyond that point. After rewards and penalties are calculated each epoch, every validator would have an additional fraction deducted from the ideal reward for whichever duty it performed — attestation, block proposal, or sync committee work — and that deducted ETH would be destroyed outright rather than redirected elsewhere. According to Galaxy Research, roughly one-third of Ethereum’s total supply is currently staked; if the proposal is fully implemented, it estimates that consensus-layer annual yield would fall from about 2.6% to roughly 1.2%. That figure, however, is a modeled projection, not a finalized monetary policy change. MEV and priority fees would be excluded from the burn mechanism.

The proposal’s authors suggested phasing the change in over 18 months to avoid a sudden drop in yields. The proposal was originally labeled EIP-8361, but since that number had already been assigned to a different proposal, Ethereum’s EIP editors later reassigned it as EIP-8363. As of August 9, the related pull request remained open, with an editor requesting changes on August 6. That same day’s All Core Developers consensus call had the proposal listed as a candidate for the upcoming Hegotá upgrade, though the meeting itself didn’t constitute formal adoption or a confirmed timeline — and by the meeting’s end, the proposal’s presenting author reportedly indicated he was considering withdrawing it from Hegotá consideration. Hegotá is slated to follow the Glamsterdam upgrade expected this fall, with the selection process for Hegotá’s contents continuing through November; even if approved, the change likely wouldn’t take effect until sometime after mid-2027.

The proposal’s authors argue that, under the current structure, Ethereum’s staking ratio could reach roughly 55% by 2028, which they warn could deepen concentration among liquid staking providers and large operators. Supporters say the change is meant to prevent runaway growth in staking participation, control ETH dilution, and head off staking concentration among institutional players. Opposition has been significant too — solo stakers and DeFi protocols have raised concerns about falling yields, added tax complexity, and the risk that concentration could actually worsen rather than improve. SharpLink CEO Joseph Chalom has voiced opposition, arguing that lower yields could make ETH less attractive to institutional investors and raise the cost of capital for DeFi. None of these outcomes are settled — they remain competing projections from different stakeholders.

On Solana’s side, two separate proposals are advancing in parallel through its on-chain governance process. SIMD-0550, put forward by Helius engineers lostintime101 and 0xIchigo, would double the network’s annual disinflation rate from 15% to 30% while keeping the terminal inflation floor at 1.5%. The technical proposal was merged into Solana’s improvement document repository with Review status on July 23. If SGP-0002 — the governance vote putting the proposal to stakers and validators — passes, the timeline for reaching the terminal inflation rate would move up from 2032 to 2029, and Galaxy Research estimates the change would remove roughly 18.9 million SOL from future emissions over six years. Under a scenario assuming 68% staking participation, staking yield would start at 5.84% and decline to 4.34% after one year, 3% after two years, and 2.25% after three years. Galaxy Research is careful to note that these figures are projections rather than guaranteed outcomes.

The fee side of the equation is addressed in SGP-0003. SIMD-0553, proposed by Temporal’s cavemanloverboy, would replace Solana’s current flat per-signature fee with a resource-based fee tied to how much computing capacity a transaction consumes, with the resource-based portion burned entirely. Based on recent network activity, daily SOL burns — currently around 650 SOL — could rise to between 7,500 and 9,000 SOL, a roughly 12- to 14-fold increase. That estimate, however, is already being revised. On August 9, cavemanloverboy said the earlier estimate had been flagged as potentially misleading and released updated optimistic and pessimistic ranges based on the prior month’s traffic, adding that behavioral changes such as contract optimization could ultimately lower burn totals.

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SGP-0002 and SGP-0003 each secured support from more than 15% of active staked SOL, qualifying them to proceed through Solana’s newly established on-chain governance process. Under the official rules, clearing that threshold triggers an 11-epoch process: seven epochs for discussion, one for a stake snapshot, and three for voting. A proposal passes if “yes” votes make up at least 66.67% of the combined “decisive stake” (yes plus no votes); abstentions aren’t counted, and there’s no separate quorum requirement. Even if an SGP passes, it functions only as a directional mandate — the associated SIMD still requires separate development work and a feature-gated rollout before it’s actually reflected in the code. This latest effort follows Solana’s earlier struggles with inflation changes: SIMD-0228 won 61.39% support in March 2025 but failed to clear the two-thirds threshold. Solana subsequently introduced the SGP framework specifically to separate stake-weighted policy signaling from technical SIMD review.

In its own analysis, Galaxy Research noted that inflation initially served both networks well, helping retain validators on chains that otherwise had little economic activity to support them. But the firm argues that kind of subsidy has a natural expiration point. In the long run, a healthy state looks like validation becoming a thin-margin service attached to a profitable on-chain business, or being funded by demand for blockspace rather than new issuance. Galaxy Research assessed that Solana’s proposals are comparatively more limited than Ethereum’s and more directly aimed at increasing token scarcity — a faster reduction in inflation benefits long-term SOL holders, but the cost falls mainly on validators and stakers through lower staking yields, while the fee-burning mechanism in SIMD-0553 could strengthen the link between network usage and SOL’s value. “Supply-side adjustments help and can make for a compelling narrative, but they aren’t a binding constraint on either chain,” Galaxy Research wrote. “Ultimately, it’s demand that will re-rate these assets.” Both networks have also experienced sharp price declines and weak performance throughout this debate. Galaxy Research emphasized that improving the technology stack, expanding institutional adoption, and building out retail products should remain the priority. While acknowledging that the security concerns raised by Ethereum’s proposal could prove valid over the long run, the firm added that given current adoption levels, the supply-side debate shouldn’t crowd out resources needed for demand-side efforts.