Galaxy Research: Why Ethereum and Solana Supply Cuts Won't Reprice ETH or SOL

• How it works: At each epoch, the network deducts and burns a fraction of every validator's idealized duty reward (covering attestations, block proposals, and sync committee work). The burn fraction rises with the staking ratio, calculated as (total active balance / SATURATION_BALANCE) ^ 1.5 .
• Saturation point: The proposal sets a fixed saturation balance of 60.25 million ETH, roughly half the current supply. Once that level is reached, 100% of consensus-layer issuance is burned, and a validator performing its duties perfectly earns zero net consensus yield .
• Current impact: At today's staking ratio of roughly one-third of ETH supply, the proposal would cut consensus-layer yield from about 2.6% to 1.2% . MEV and priority fees would remain untouched . The reduction would phase in over 18 months to prevent a sudden wave of validator exits .
• Status: EIP-8361 remains at Draft status and has not been approved or scheduled for any Ethereum upgrade .

Solana: SIMD-0550 and SIMD-0553 (SGP-0003 Bundle)

Solana's community is advancing two linked governance proposals, combined into a single package called SGP-0003, that would tighten SOL supply from both directions .

SIMD-0550 — Accelerated Disinflation

Submitted June 2, 2026, by Helius engineer lostintime101, SIMD-0550 doubles Solana's annual disinflation rate from 15% to 30% . The starting inflation rate of 8% and the long-term floor of 1.5% remain unchanged, but the network would reach that floor by 2029 instead of 2032 . The proposal is estimated to reduce SOL issuance by approximately 18.9 million SOL over six years, resulting in about 2.6% less supply than under the current schedule .

SIMD-0553 — Resource-Based Fee Burn

Authored by Cavey of the Temporal research team, SIMD-0553 replaces Solana's flat 5,000-lamport per-signature transaction fee with a two-part structure . Every transaction pays a 2,500-lamport inclusion fee to the block leader and a separate variable resource fee calculated on compute units requested. That resource fee is burned in full rather than distributed to validators .

At recent network activity levels, this change would lift daily SOL burns from around 650 SOL ($47,000) to 7,500–9,000 SOL ($650,000) — a 12- to 14-fold increase . The resource fee ramps through three feature gates before reaching its terminal rate of 0.5 lamports per compute unit .

Vote Status

As of early August 2026, SGP-0003 was nearing a formal governance vote, needing 15% validator support to proceed . Validators had begun signaling support, with 10 days remaining in the voting window as of Aug. 8 .

Galaxy Research's Central Argument: Supply Cuts Are Not Enough

Galaxy's report — titled "High on Their Own Supply?" — argues that both networks are asking the same fundamental question: "How much security budget is required?" . The analysis cautions that cutting inflation and increasing burns are supply-side fixes that do not guarantee price appreciation .

The key takeaway: Without organic demand — measured by network usage, application activity, and capital inflows — reduced issuance alone can slow dilution but cannot create upward price pressure . Galaxy's analysis implies that the market's focus should shift toward adoption and utility, not just tokenomics tweaks .

Under a hypothetical 68% staking scenario, staking yield would start at 5.84% and fall to 2.25% by year three, illustrating that even aggressive staking does not automatically translate into price gains .