Token Inflation Haunts Solana as Supply Surges Past 543M

TL;DR Breakdown

Solana’s circulating supply jumped 53% in three years, sparking criticism over “hidden inflation.”
Cardano SPO Dave argued that projects without supply limits act like central banks, inflating away long-term value.
SOL price slipped 15% in a week, threatening to break below $200 amid falling trader participation.

Solana is facing renewed scrutiny over its tokenomics after its circulating supply ballooned 53% in just three years. It climbed from 354.9 million to 543.5 million coins. At today’s price of $203, that’s equivalent to $38.3 billion worth of new tokens entering circulation, said Cardano stake pool operator Dave.

Cardano SPO sparked debate in a recent post, calling Solana’s model a “hidden inflation problem”. He added that this mirrors the same currency debasement Bitcoin was designed to prevent. Dave pointed out that, unlike Bitcoin’s 21 million hard cap or Cardano’s 45 billion fixed limit, Solana has no maximum supply.

“Projects without a hard cap are, in effect, their own central bank,” Dave wrote. “They inflate away value. Over time, scarcity wins.”

Solana Under Fire for Token Dilution

Dave’s argument highlights Bitcoin’s original design philosophy. In the 2008 whitepaper, Satoshi Nakamoto described capped supply as a deliberate feature to protect against inflation. It is a principle that coins like BTC, ADA, and XRP still follow. He added that among the top 10 digital assets, only those three enforce strict supply caps.

This comes in when Solana is dealing with a high selling pressure as sentiments drop into the fear territory. Solana price dipped by more than 15% in the last 7 days while it is down by 6% over the past 30 days. The fresh sell-off is threatening to break below its $200 support level. On-chain data shows a decline in market participation as traders unwind positions, raising the risk of further slippage toward $195.

Solana is trading at an average price of $203.11 at the press time. It is the sixth biggest crypto with a market cap of $110.4 billion. On the other hand, Cardano has managed to disappoint its holders. ADA price is running down by 7% on a year-to-date (YTD) basis. Cardano is trading lower by 74% from its all-time high of $3.10, recorded in September 2021. ADA is the 10th biggest crypto ,holding a market cap of almost $30 billion.

Ironically, the renewed spotlight on Solana’s inflation problem comes just as Wall Street is moving closer to listing a Solana ETF. Bitwise filed Form 8-A with the US SEC last week. It is a procedural step that paves the way for spot Solana ETFs once regulators sign off. Other issuers, including Grayscale and Franklin Templeton, have recently amended filings as well, with NovaDius Wealth president Nate Geraci suggesting approvals could land within two weeks.

Whether ETF optimism can offset concerns about unchecked inflation remains an open question. As for now, Solana investors are left weighing the upside of institutional adoption against the long-term drag of token dilution.