The SOL token: inflation, fee burning and staking

SOL is the fuel of the network: it pays fees, it is locked up in staking and it gives validators their voting weight. The smallest unit is called a lamport – one SOL has a billion lamports. Unlike Bitcoin, though, SOL has no fixed cap on the number of coins.

Inflation: a tap that slowly closes#

Every epoch new SOL is created and goes to validators and to those who stake with them. That is called token inflation. It started in 2021 at 8% a year and under the original plan fell by 15% of its value every year, down to a long-term floor of 1.5%.

In August 2026 validators narrowly voted to make it fall twice as fast – by 30% a year. Inflation is now expected to reach the 1.5% floor around 2029. At the time of writing (October 2026) it is just under 4% a year.

Burning: the drain in the bathtub#

Half of every base fee is burned – gone forever. The other half goes to the validator, as do all priority fees. Burned SOL lowers the number of coins, but in normal operation it is far less than what inflation adds. The bathtub fills faster than it drains.

Staking: why unstaked SOL loses its share#

About two thirds of all SOL is staked, and at the time of writing the yield is around 5–6% a year. It sounds like interest, but much of that "yield" is just a share of newly printed SOL:

• Whoever stakes has more SOL at the end of the year and their share of all SOL rises slightly.
• Whoever does not stake has the same number of SOL, but their share falls by the inflation rate every year.

The real gain above inflation is only about 1–2% a year – and that is in SOL, not in your own currency. If the price of SOL halves, no staking makes up for it. Module 3 covers staking in detail.

Who owns SOL#

At the network's launch a large share of SOL went to the founders, early investors and the foundation. One of the biggest holders was the FTX exchange together with the Alameda fund. When FTX went bankrupt in November 2022, the market feared its SOL would all be sold at once:

From a high of 38.79 USD on 5 November, SOL fell to 12.37 USD in four days and to 8 USD by the end of the year. In 2024 the FTX bankruptcy estate then sold a large part of its SOL at a discount to investment funds – on terms that release the tokens gradually so they do not flood the market.

Common myths#

• "Staking is risk-free 6% interest." Most of it is a share of inflation, and the result in your own currency depends on the price.
• "Fee burning makes SOL deflationary." In normal operation inflation is far bigger than burning.
• "FTX is history, it no longer affects SOL." Gradually released tokens are supply the market has to absorb.