A proposal to dramatically change Solana’s inflation system has been rejected by stakeholders but is being hailed as a victory for the network’s governance process.

“Even though our proposal was technically defeated by the vote, this was a major victory for the Solana ecosystem and its governance process,” commented Multicoin Capital co-founder Tushar Jain on March 14.

Around 74% of the staked supply voted on proposal SIMD-228 across 910 validators, but just 43.6% voted in favor of it, with 27.4% voting against it and 3.3% abstaining, according to Dune Analytics. It needed 66.67% approval from participating votes to pass and only received 61.4%.

Jain added that this was the biggest crypto governance vote ever, by both the number of participants and the participating market cap, of any ecosystem, chain or network.

“This was a meaningful scaling stress test — a social, rather than technical, stress test — and the network passed despite a wide stratification of diverging opinions and interests.”

“Solana SIMD-228 voter turnout was higher than every US presidential election in the last 100 years,” claimed the team behind Solana’s X account. 

SIMD-228 final vote count. Source: Dune

SIMD-228 is a proposal to change Solana’s (SOL) inflation system from a fixed schedule to a dynamic, market-based model. Instead of a pre-set decrease in inflation, this new system would dynamically adjust based on staking participation.

Currently, supply inflation begins at 8% annually, decreasing by 15% per year until it reaches 1.5%. The new mechanism may have reduced it by as much as 80%, according to some estimates. Solana inflation is currently 4.66%, and just 3% of the total supply is staked, according to Solana Compass. 

However, such high inflation can increase selling pressure, reduce SOL’s price and discourage network use. The proposed system would have adjusted inflation based on staking levels to stabilize the network and minimize unnecessary token issuance.

Solana’s current inflation schedule. Source: Helius

Benefits would have included increased network security due to dynamically increasing inflation if staking participation drops, reaction to real-time staking levels rather than following a fixed, inflexible schedule, and encouraging more active use of SOL in DeFi, according to Solana developer tools provider Helius. 

However, lower inflation could have made it harder for smaller validators to stay profitable, the proposed model increased complexity, and unexpected shifts in staking rates might have led to instability.

Related: Solana price bottom below $100? Death cross hints at 30% drop

There was little reaction in SOL prices, with the asset dipping 1.5% on the day to just below $125 at the time of writing. 

However, it has tanked by almost 60% in just two months as the memecoin bubble burst. Solana network revenue has also slumped over 90% since it was primarily used to mint and trade memecoins. 

Magazine: Mystery celeb memecoin scam factory, HK firm dumps Bitcoin: Asia Express

A Democrat lawmaker has called on the US Treasury to “cease all attempts” to create a strategic crypto reserve in the United States, citing conflicts of interest with US President Donald Trump and arguing that a stockpile would not benefit the American people.

House Representative Gerald E. Connolly of Michigan criticized the “cryptocurrency reserve” in a March 13 letter to Treasury Secretary Scott Bessent, stating that it provides “no discernible benefit to the American people” and would instead significantly enrich the president and his donors.

Connolly, who didn’t discern between the Strategic Bitcoin Reserve and the Digital Asset Stockpile, said Trump’s plans would constitute “unsound fiscal policy” because it chooses certain cryptocurrencies over others via social media.

Connolly said the Trump administration’s plan would also waste taxpayer dollars on what the Federal Reserve described as “the dumbest idea ever.”

“No strategic need has arisen that would necessitate investment in the volatile and speculative cryptocurrency market,” Connolly, the ranking Democrat on the House committee on oversight and government reform, said in the letter. 

“[It] would constitute nothing more than a highly speculative taxpayer-backed hedge to provide bitcoin speculators the assurance that when the crash comes, the State will deploy this fund to rescue it.”

Democrat Gerald E Connolly’s letter to Treasury Secretary Scott Bessent. Source: US Committee on Oversight and Government Reform Democrats

However, the White House has said that the Digital Asset Stockpile will only hold onto cryptocurrency already forfeited. At the same time, the Bitcoin (BTC) reserve will only make acquisitions through budget-neutral strategies that won’t impact taxpayers.

Connolly also said that Trump failed to consult with Congress over the Bitcoin reserve plan, let alone obtain congressional authorization to create it.

Connolly also alleged there were conflicts of interest between Trump’s presidential duties and the Trump Organization’s ownership of the crypto platform World Liberty Financial, in addition to the Official Trump (TRUMP) memecoin.

The Democrat referred to the TRUMP token as a “money grab” that has allowed Trump-linked entities to cash in on over $100 million worth of trading fees. 

This has been called Trump’s “most lucrative get-rich scheme yet,” Connolly added.

Related: Bitcoin reserve may end up a ‘potent political weapon’ — Arthur Hayes

Representative Maxine Waters, a Democrat on the House Financial Services Committee, also criticized Trump’s memecoin on Jan. 20, referring to a rug pull while claiming the launch represented the “worst of crypto.”

Connolly has asked Bessent to provide documents and communications related to the creation of a Bitcoin reserve and a complete list of steps the Trump administration has taken to avoid a conflict of interest.

Connolly also asked for a list of companies in which the Treasury has crypto-related financial interests. He also asked:

“Has the Presidential Working Group on Digital Asset Markets on which you serve, which has been tasked with developing a federal regulatory framework to govern the cryptocurrency reserve, reviewed financial disclosures by the Administration officials, including but not limited to Elon Musk?”

The Strategic Bitcoin Reserve will initially use cryptocurrency forfeited in federal criminal or civil cases. Meanwhile, the Digital Asset Stockpile will consist of cryptocurrencies other than Bitcoin, which could include XRP (XRP), Solana (SOL), Cardano (ADA) and Ether (ETH). 

Magazine: Crypto fans are obsessed with longevity and biohacking: Here’s why

US state Vermont has dropped its “show cause order” against crypto exchange Coinbase for allegedly offering unregistered securities to users through a staking service.

Vermont’s Department of Financial Regulation said in a March 13 order that in light of the US Securities and Exchange Commission tossing out its case on Feb. 28, it would follow suit and rescind its action against Coinbase without prejudice.

“The SEC has announced the formation of a new task force to, among other things, provide guidance for the promulgation of rules regarding the regulation of cryptocurrency products and services,” the department said.

Vermont’s financial regulator has decided to drop its legal action against Coinbase. Source: Vermont’s Department of Financial Regulation

“In light of the dismissal of the Federal Action and likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice.”

On the same day the SEC filed its lawsuit in June 2023, the US states of Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin said they were launching legal proceedings against Coinbase.

The show cause order asserted that Coinbase was violating securities laws by offering staking to its users without a license and demanded the exchange provide a reason why the courts shouldn’t hit them with an order directing them to halt the service. 

Now that Vermont has opted out, Coinbase chief legal officer Paul Grewal said in a March 13 statement to X that the other states with staking actions should take a “page from Vermont’s playbook.”

Source: Paul Grewal

“As we have always said: staking services are not securities. We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets,” he said.

“Our work isn’t over. Congress must seize the bipartisan momentum we’re seeing across the House and Senate to pass comprehensive legislation that takes into account the novel features of digital assets, such as staking,” he added.

Related: YouTuber says SEC will recommend dropping lawsuit over 2018 token ICO

A growing number of firms facing legal action from the SEC have had their cases dismissed in the wake of former SEC Chair Gary Gensler, who took a hardline stance toward crypto, resigning on Jan. 20.

Crypto trading firm Cumberland DRW was among the latest to have its case dropped on March 4, while the regulator is reportedly wrapping up its enforcement action against Ripple Labs after more than four years.

Grewal has also launched a request under the Freedom of Information Act to find out how many enforcement actions were brought against crypto firms under Gensler’s tenure between April 17, 2021, and Jan. 20, 2025, and the cost to the taxpayer. 

Magazine: Elon Musk’s plan to run government on blockchain faces uphill battle