$SOL
💥This is FUD for SOL.
⚡️Among high market capitalization tokens, SOL’s inflation rate is a bit over the top.
If Solana cannot maintain its MEME popularity.
Due to inflation dilution, the selling pressure on SOL spot is very obvious.
All SOL tokens are generated from the genesis block or through inflation of the protocol (i.e. staking rewards).
The only destruction mechanism comes from transaction fees.
1. Early selling pressure:
Solana faced difficulties raising capital in its early days.
Its initial 5 million SOL tokens were sold through auction.
The final liquidation price is only US$0.22 per coin.
This amount has exceeded 12% of the current total circulation.
2. Impact of pledge rate and inflation:
Because the pledge threshold is relatively low.
Solana has 65% of its tokens staked.
Become a public chain with extremely high pledge rate.
SOL’s inflation transfers wealth from non-stakers to stakers through staking rewards.
It has a significant dilution effect on non-pledgers.
3. Key inflation parameters:
Initial inflation rate: 8%
Year-on-year reduction in inflation rate: 15%
Long-term inflation rate: 1.5%
4. Inflation comparison:
The current inflation rate for SOL is 5.07%
Far exceeding BTC’s 1.7% and ETH’s 0.8%
This means that nearly 3 billion US dollars of SOL will be produced this year.
The high pledge rate further weakens the depth of liquidity.
Making the price drops caused by the sell-off more significant.
5. Comparison between BNB and SOL:
Both BNB and SOL performed well this cycle.
But BNB’s burning plan has reduced its total supply from the original 200 million to 100 million.
Solana needs to consider lowering long-term inflation.
Speed up the pace of reducing inflation, or use means such as MEV commissions and LST to transfer inflationary pressure.
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