SIMD-0228 Proposal: The ‘life and death line’ of Solana validators?

Recently, the hotly debated SIMD-0228 proposal in the Solana community aims to adjust the network inflation rate to optimize the staking economic model. However, behind this seemingly technical adjustment, it may directly threaten the survival of validators. According to the data model predictions of independent researchers, if the proposal is implemented, the Solana network may lose 50 to 250 validators, depending on the changes in costs, MEV earnings, and SOL prices.

The core contradiction of this proposal lies in the fact that while reducing the inflation rate can alleviate the dilution pressure on SOL tokens, it may weaken the income source of validators, thereby threatening the decentralization of the network.

Image: Original Proposal
https://github.com/solana-foundation/solana-improvement-documents/pull/228/files#diff-4c9f52adaf6cb3c34374dfbcdddbeae747adaad976b844aa00935e00a2576940

Decomposition of the data model: how the three main pillars of validators’ profits collapse

Through open-source model analysis, validators’ income mainly depends on the following three parts:

1. Inflation rewards (currently accounting for about 60-70%)
2. Transaction fee (base fee + priority fee + voting fee)
3. MEV revenue (such as Jito sharing)

After the implementation of SIMD-0228, the inflation rewards will be significantly reduced. Assuming other income remains unchanged, the model shows:

• Current revenue level: Small and medium-sized validators ranked 751-1000 will fall into losses
• A 20% decrease in revenue: Validators in the 501-750 tier may be forced to exit
• Extreme scenario (income down 80%): Only the top 250 large validators can survive

Image:https://x.com/david_grid/status/1896595291836690716?s=46

Validator cost structure: How $15,000 per month crushes small players

According to the model calculation, the annual cost of running a Solana validator is about $85,000 (approximately $7,000 per month), including:

• Hardware and bandwidth: two servers + maintenance, averaging $1500-2000 per month
• Voting cost: approximately 30% of total expenditure based on current rates
• Opportunity cost: Liquidity loss from staking SOL

If the income decreases after the implementation of SIMD-0228, small and medium validators will be the first to bear the brunt. For example, the annual income of validators ranked after 500 may drop below $50,000, unable to cover operating costs.

Community Controversy: The Difficult Balance Between Efficiency and Decentralization

Developers supporting SIMD-0228 believe that reducing inflation can enhance the long-term value of SOL and regulate validator competition through the fee market. However, opponents point out two major risks:

1. Centralization intensifies: After small validators exit, top players may monopolize staking.
2. Security vulnerability: A decrease in the number of validators may reduce the network’s ability to resist attacks.

Researchers suggest taking a compromise approach to this.

• Lower the voting fees first: Ease the burden on small and medium validators
• Dynamic adjustment mechanism: optimize inflation rate in real-time based on the number of validators

The future of the SOL ecosystem: Is more validators really better?

Currently, Solana has approximately 1800 active validators, far exceeding other public chains (such as Ethereum with approximately 800,000 nodes). However, quantity ≠ quality:

• Efficiency dilemma: Too many validators may cause consensus delays
• Economic paradox: high inflation maintains the number of validators but harms the interests of coin holders

The community needs to find a balance between network security, decentralization, and economic sustainability. As the model creator said, ‘There is no one right answer, but data should replace intuition as the basis for decision-making.’

Conclusion: The crossroads of SOL, where ecological health is more important than short-term interests

Proposal SIMD-0228 exposes the core contradiction of PoS public chains - how to maintain decentralization without relying on inflation subsidies. For SOL holders, a short-term reduction in inflation may push up the coin price, but if validators’ large-scale loss leads to network fragility, the long-term cost may far exceed the benefits.

Currently, the price of SOL is around $144 (March 5, 2025). SOL has recently experienced significant fluctuations, please trade cautiously and be aware of the risks.

https://www.gate.io/trade/SOL_USDT