Howdy!

Today is Lightspeed newsletter edition #228, so I decided this was a sign from the Solana gods (co-founders?) that I should write about inflation. Real Solana sickos will understand why.

Today, we’ve got that inflation piece, Solana’s gross vs. net issuance, and Jupiter’s surprise acquisition of DRiP:

Following Solana inflation reduction defeat, could ‘left curve 228’ be next?

It’s been three weeks since Solana’s validators failed to pass SIMD-0228, a governance proposal that aimed to shift Solana’s issuance to a market-based mechanism and reduce inflation in the process. But while validators — who earn their keep partly from Solana inflation — voted the measure down, issuance still doesn’t feel like a settled question. 

With the implementation of SIMD-0096, which got rid of Solana’s priority fee “burn,” the network also lost a disinflationary mechanism, and many ecosystem participants feel that the network is “overpaying” for economic security by way of inflation. While there’s no looming fix for this in the short term, the Solana Foundation’s former head of strategy has made a counterproposal.

Austin Federa’s “left curve 228” pitch says Solana should accelerate the network’s disinflation curve and “see if anything breaks.” 

Solana’s inflation curve sets a current issuance rate of around 4.6% which will shrink to 1.5% in 15% increments every 180 epochs, or roughly one year. Federa, who is now co-founder of the buzzy internet infrastructure for crypto startup DoubleZero, would increase the disinflation rate to 30% every 180 epochs. 

Rounding 180 epochs to a year, Federa’s proposal would drop Solana’s inflation rate to around 1.5% in roughly three years. The benefit of such a scheme, Federa points out, is that it would keep Solana from overpaying for security without creating uncertainty on inflation rates — which some in Solana criticized SIMD-0228 for doing.

The proposal has taken some heat, most notably from Kevin Ricoy, founder of crypto media startup Allmight. Ricoy chafed against “well-meaning autists playing central banker [and] constantly fiddling with the monetary policy” while arguing that bitcoin’s value comes from its changeless inflation mechanics. He followed up with a more measured rebuttal later on.

When I DMed Federa to ask whether he had any comment to add on “left curve 228,” he said: “Heh. Not really,” before writing: “I think at its core 228 felt complicated at a time when people crave simplicity. As people feel the change from AI, from a change in government in many countries around the world, it just seemed messy. Left curve 228 was an attempt to not let the great be the enemy of the good and to move Solana in the right general direction. Left curve 228 is objectively wrong — but I do think it is less wrong…And less wrong is great. Solana burns 50% of base fees which is not optimal — but it’s pretty close to optimal and it’s very easy to understand.”

He then added, “[Oh] no, did I just do a Cobie?”

— Jack Kubinec

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After SIMD-0096 was implemented, SOL’s gross issuance was reunited with its net issuance:

On this chart, gross issuance is SOL inflation before SOL — like half of priority fees in former times — is burned, and net issuance is inflation after SOL is burned.

You can see that in the post-election and inauguration trading frenzy, this gap between gross and net issuance was in the tens of millions of dollars some weeks. In the next demand spike for Solana blockspace, validators will bring in pretty good money.

— Jack Kubinec

Jupiter has acquired the Solana collectibles platform, DRiP Haus. Making NFTs part of the protocol's super app pitch should bolster Jupiter's onboarding strategy, with the company looking to siphon "millions of collectors" and "thousands of creators" into its Jupiverse.

This is all part of Jupiter's plan to become crypto's everything app, with DRiP helping to power NFT integrations across swaps, mobile and various portfolio features. Back in January, Jupiter also acquired a majority stake in Moonshot, which briefly topped App Store finance charts after being spotlighted during Trump’s memecoin launch.

The decision to lean into the momentum of its ecosystem stands in contrast to its DAO's ongoing drama. It's clear that budget votes, inflation and staking outflows have rattled many holders. Despite the team's treasury deal, $JUP has slumped to major lows. Jupiter leadership has promised to halt governance proposals on salaries and working groups, hinting at a leaner path forward. Still, skepticism remains as unstaking levels continue to hover near record highs.

Takeaway: Jupiter is signaling that product dev isn't waning in the face of token volatility. Going forward, NFTs may become far more accessible and woven into DeFi tools you already use. If Jupiter's leaning into NFTs, it's probably not just to chase the speculative hype of 2021 but to turn them into functional primitives for the next phase of crypto UX. At least, one can dream.

— Jeff Albus

A message from Vibhu Norby, co-founder of DRiP (acquired by Jupiter):