Solana Treasury Supports Bold ‘Double Disinflation’ Strategy Amid 30% Price Drop

Solana treasury backs ‘double disinflation’ plan amid 30% price decline

The Solana Digital Asset Treasury and DeFi Development Corp. (DFDV) have publicly backed a significant proposal aimed at speeding up the network's disinflation rate. This comes as Solana experiences a notable price decline of 30%.

Key Takeaways

DFDV supports a proposal to increase Solana's disinflation rate from 15% to 30%.
The change could decrease future emissions by over 22 million SOL within six years.
Solana’s price has fallen from $197 to $136, triggering intense discussions on inflation.
DFDV is the third-largest corporate holder of SOL tokens, with a current value of approximately $300 million.

Proposal to Boost Solana's Disinflation Rate

On Tuesday, the DeFi Development Corp. (DFDV) became the first Solana treasury to publicly endorse the Solana Improvement Document (SIMD)-0411. This initiative proposes to double the annual disinflation rate for Solana from 15% to 30%, aiming to cut projected future emissions by more than 22 million SOL over the next six years.

“This proposal might surprise some, but its timing is well-considered,” DFDV stated. They highlighted that there's been growing concern in the ecosystem about Solana's current inflation schedule and its effects on SOL's market price.

Currently, DFDV holds almost 2.2 million SOL, valued at around $300 million at the time of writing, making it the third-largest corporate issuer of SOL tokens. While DFDV's backing lends significant support to this major discussion, other digital asset treasuries, such as Forward Industries and the Solana Company, have yet to comment on the matter.

Source: Mert Mumtaz

Accelerating Solana's Disinflation

The proposal, introduced by Helius Labs developers, represents a pivotal monetary policy change for Solana since its inception. The initiative suggests that by doubling the disinflation rate, the network could reach its expected 1.5% terminal inflation rate in just three years, instead of the previously estimated six years.

Proposal seeks to speed up Solana disinflation. Source: GitHub

According to the modeling included in the proposal, implementing this change could reduce expected emissions by around 22 million SOL tokens, which translates to approximately $3 billion over a six-year time frame. Developers noted that the current inflation model no longer mirrors the network's growing maturity, citing improvements in network revenue, user engagement, and decentralized finance (DeFi) activities.

By tightening issuance, advocates argue that Solana can alleviate structural selling pressure and align itself more with what institutional investors seek from modern cryptocurrency assets.

Solana's Price Drop Intensifies Pressure on Digital Asset Treasuries

Recent data from CoinGecko reveals that SOL has decreased from $197 on October 26 to $136 currently, indicating a 30% drop in the past month. This notable downturn has heightened discussions around inflation, as many corporate stakeholders find themselves facing significant losses.

CoinGecko’s data indicates that Forward Industries, the largest corporate holder of SOL, is experiencing an unrealized loss estimated at $646.6 million, equating to a 41% drop from its total acquisition price. Upexi, which ranks as the fifth-largest holder, also reports unrealized losses of about $31 million, translating to a 10% decline from its initial investment.

In contrast, DFDV, which has publicly supported the new proposal, remains profitable. According to CoinGecko, the treasury has gained around $62 million, reflecting an unrealized gain of 26.6% on its SOL investments so far.

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