Solana (SOL) Price: Governance Proposal Rejected as FTX Liquidations Drive Price Below $125
TLDR
- Solana’s SIMD-228 proposal to reduce inflation by up to 80% failed to pass with only 43.6% voting in favor
- FTX and Alameda Research have unstaked approximately 8 million SOL tokens since November 2023
- Recent unstaking of $23 million worth of SOL by Alameda has added selling pressure
- SOL price has dropped below the critical $125 support level amid continued liquidations
- 5.5 million SOL tokens ($693 million) remain under FTX/Alameda control, posing ongoing sell pressure risk
Solana’s price has fallen below $125 as two major events impact the cryptocurrency’s market performance. A key governance proposal to change the inflation model was rejected, while ongoing FTX liquidations continue to create selling pressure on the token.
The Solana community recently voted on proposal SIMD-228, which aimed to change the network’s inflation system. The vote saw 74% of the staked supply participate across 910 validators.
Despite this impressive turnout, the proposal failed to reach the required 66.67% approval threshold. Only 43.6% voted in favor, with 27.4% voting against and 3.3% abstaining.
Multicoin Capital co-founder Tushar Jain called the process “a major victory for the Solana ecosystem and its governance.” He noted it was the largest crypto governance vote ever held.
The SIMD-228 proposal would have changed Solana’s inflation from a fixed schedule to a dynamic model. The current system starts at 8% annual inflation and decreases by 15% yearly until reaching 1.5%.
This fixed model can increase selling pressure and potentially reduce SOL’s price. The proposed system would have adjusted inflation based on real-time staking levels, possibly reducing inflation by up to 80%.
SOL’s current inflation rate stands at 4.66%, with only 3% of the total supply staked according to Solana Compass. The proposal’s supporters argued it would have improved network security and encouraged more active use of SOL in DeFi applications.
FTX and Alameda Research have added to sell pressure
Meanwhile, FTX and Alameda Research transactions have added to market pressure. On March 13, Solana’s price fell 5% after Alameda Research unstaked over $23 million worth of SOL.
According to Arkham Intelligence, these tokens were distributed across 38 different addresses. This action has raised concerns about more SOL entering the market.
Since November 2023, FTX and Alameda Research have unstaked approximately 8 million SOL tokens, valued at nearly $1 billion. Many of these tokens have already been sold through major exchanges like Coinbase and Binance.
3 million SOL tokens unlocked in early March
A major unstaking event occurred in early March when FTX unlocked over 3 million SOL tokens, worth approximately $432 million. This has kept Solana’s price performance behind other altcoins even during broader market uptrends.
Market participants remain concerned about the 5.5 million SOL tokens (valued at around $693 million) still under FTX and Alameda control. These assets could be unstaked or sold at any time.
From a technical perspective, Solana’s price action continues to face downward pressure. After briefly reclaiming the $131 mark, SOL quickly reversed and dropped below the $125 support level.
A possible reversal around $112
Some analysts point to a possible reversal around $112 based on Elliott Wave patterns. Others note a strong sell wall exists around $180, with support at current price levels.
SOL has fallen by almost 60% in just two months following the burst of the memecoin bubble. Solana network revenue has also decreased by over 90% as activity related to minting and trading memecoins has declined.
Despite improving broader market conditions, including cooling inflation trends indicated by recent U.S. economic data, Solana’s potential for a price rebound appears limited while FTX liquidations continue.
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