Solana Max Supply: Does Solana Have A Hard Cap?

Solana Max Cap

Solana Max Cap

Solana has seen enormous growth over the past few months, but when it comes to tokenomics, does is there a Solana max supply?

Described as a potential ‘Ethereum Killer’, SOL rose to sixth place in the cryptocurrency rankings by market cap in early September. After reaching a price of over $100 in 2021, several crypto crashes have led to its price crashing. It is now the 9th largest cryptocurrency.

With its price dropping to $43.94, here's a look at the max supply of SOL.

Solana Max Supply of SOL

Solana does not have a fixed max supply of SOL. Instead, what is fixed is the inflation rate YOY.

The current total supply is 526,996,797 SOL, with a circulating supply of 348,837,796 SOL as of July 2022 (via Solana).

When the Solana network first launched, it had an initial total supply of 500,000,000 SOL. However, the Solana Foundation previously burned 11 million SOL. This reduced the total supply down to around 488,000,000 SOL.

While 488,000,000 SOL is often touted as the Solana max supply, its inflation schedule shows this is not the case.

With new SOL rewarded as Solana staking yield, Solana’s initial inflation is at 8%. This inflation rate will reduce 15% year on year until it settles on what Solana described as its ‘Long-term Inflation Rate’ of 1.5%.

According to SolanaBeach, Solana’s total inflation is 4.98%

From Solana’s inflation proposal, the total supply of SOL will reach 550,000,000 after two years. By the eighth year, it should hit 700,000,000. After reaching its long-term inflation rate, it will consistently increase by 1.5%.

However, as Solana notes, this is an “upper limit on the amount of SOL issued via inflation”, as it does not account for the destruction, or burning, of any SOL.

Does Solana have a burn rate?

Since Solana is not a deflationary token, the supply of SOL is growing at a predetermined rate.

Solana is built on a new inflation model which adheres to three parameter to maintain its equilibrium

  1. An initial inflation rate;
  2. A dis-inflation rate;
  3. A final/long-term inflation rate.

However, the protocol does burn a portion of its transactions fees to keep the supply limited and balanced

Read More: Solana Roadmap: What New Updates Are Coming To Solana?

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