🔑 Key Notes
- Galaxy Research proposes a new voting system (MESA) to adjust Solana’s inflation.
- Solana (SOL) bounced over 4.5% after Canada launched the first staked SOL ETFs.
- SOL reclaimed the top spot in DEX activity, with TVL rising 12% to $7.08 billion.
- Risks remain, including concerns about manipulation by large validators.
Galaxy Digital suggests a market-driven model for Solana inflation
Galaxy Digital, a leading crypto investment firm and infrastructure provider, is stepping up its role in blockchain governance through its research arm, Galaxy Research. The firm offers services across asset management, trading, and validator operations. Now, it has introduced a proposal that could reshape Solana’s (SOL) inflation model, a key factor for traders and investors.
The new proposal, called MESA (Multiple Election Stake-Weight Aggregation), offers a more flexible voting system.
Validators would vote across a range of possible deflation rates instead of making a simple yes/no decision.
Votes would be combined using a weighted average to decide the new inflation rate.
This idea follows an earlier plan called SIMD-228. Although most participants agreed inflation should decrease, the old system only allowed yes or no voting. The plan failed because they couldn’t agree on how much to reduce inflation, and no changes were made.
Potential impact: Could tighten SOL supply
If MESA is implemented, it could speed up SOL’s inflation cuts, reducing the amount of new SOL entering circulation. For investors, this is critical. Lower inflation often strengthens price fundamentals over time if network activity stays healthy. Currently, SOL’s inflation drops automatically every year, starting from around 8% and aiming for a 1.5% terminal rate.
Under MESA, validators could push for faster deflation earlier. For patient traders and long-term investors, reduced supply pressure could be bullish for SOL’s future price trends.
Risks: Manipulation concerns with the weighted average system
While MESA brings more flexibility, it also opens the door to manipulation risks. Because the system uses a weighted average, validators with larger staked SOL amounts could vote for extreme cuts to skew the result. This could lead to inflation outcomes that don’t truly reflect what most smaller validators want.
Example:
If most small validators vote for a 20% cut, but large validators vote for a 50% cut, the final outcome could move closer to 50%. This happens because votes from bigger holders carry more weight, even if fewer people voted for extreme changes.
Some critics propose using a median instead of an average. This would limit manipulation and create more honest, balanced results. MESA is still only a proposal and has not been implemented yet. Discussions are ongoing within the SOL community.
Market outlook: Early stage but worth tracking
The MESA proposal shows Solana’s commitment to improving its governance system as the network grows. Whether or not MESA is approved, traders should closely watch SOL’s supply model. Changes in inflation could quietly influence SOL’s price over the long run. For now, SOL’s price remains closely tied to broader crypto market sentiment, but decisions like these could reshape its future fundamentals for serious investors.
