codex

Colosseum Codex: Market-Driven Emissions, SVM Deep Dive, Internet Capital Markets

Market-Driven Emissions, SVM Deep Dive, Multicoin Capital's Solana Thesis, Startup Resources, Pinocchio, Phantom Raise

Mike Hale

23 Jan 2025 — 6 min read

📣 BREAKING NEWS...

Back in March 2024, I partnered with Colosseum to bring my Solana developer newsletter to their platform. Today, I’m thrilled to share that I’ve officially joined Colosseum full-time as Head of Content and Marketing!

My mission is clear: to deliver the most valuable content and resources to developers, builders, and founders on Solana, empowering them to grow their businesses and brands.

I’m also dedicated to making Colosseum’s global Hackathons and Accelerator program a world-class experience where builders can thrive.

What does this mean for the newsletter?

Nothing’s changing—except maybe getting even better!

You’ll still receive a weekly roundup of the latest news, tools, podcasts, and resources to help you build your project. I’ll also have the opportunity to bring you deeper insights into everything I already cover.

If you haven’t already, be sure to create an account on Colosseum. It’s becoming the ultimate resource hub for turning your ideas into reality.

I’m excited to join the Colosseum team and can’t wait to help grow the Solana ecosystem alongside you. Let’s build something amazing together!

And on that note here is the latest roundup for Solana builders...

🎊 Market-Driven Emissions Proposal

Solana's current inflation mechanism uses a fixed emissions schedule to reward validators and stakers who maintain the network's security.

This schedule began with an 8% annual inflation rate at the network's launch, designed to incentivize early participation. This rate decreases by 15% each year and is expected to stabilize at 1.5% around 2030.

Validators play a key role, receiving newly issued SOL for validating transactions and sharing these rewards with stakers who delegate their tokens.

These rewards are composed not only of emissions but also of transaction fees and Miner Extractable Value (MEV), which validators earn by strategically ordering transactions.

The fixed emissions schedule, while providing predictability, has limitations. It doesn't adapt to changing network conditions, meaning token issuance remains constant regardless of the economic climate or staking levels.

This rigidity was less of a concern when Solana was nascent and needed to attract validators. However, as the network matured, validators became less reliant on token emissions for income, supplementing it with MEV and transaction fees.

The current model continues to benefit stakers through emissions but dilutes the value of SOL held by non-stakers. This has raised concerns about inflation's impact on SOL's overall utility and attractiveness.

The proposed governance change, SIMD-0228, introduces Smart Emissions, aiming to make inflation rates more responsive to real-time network conditions.

The proposal sets a target staking participation rate of 50%, calculated as the total staked SOL divided by the circulating supply.

If staking participation falls below 50%, the network would increase token emissions to incentivize more staking and bolster security.
Conversely, if staking participation exceeds 50%, emissions would decrease to mitigate inflationary pressure and reduce staking rewards.

This adjustment would be programmatic, automatically responding to changes in staking levels.

The proposal includes upper and lower bounds for emissions.

The upper bound would align with Solana's current inflation schedule, preventing excessive emissions. The lower bound would allow emissions to temporarily drop to zero if staking participation consistently surpasses the target.

This flexibility allows the network to adapt without over-issuing tokens.

If implemented, this proposal could significantly alter Solana's economic dynamics. Validators and stakers might experience reduced rewards, especially if MEV revenue doesn't fully compensate for lower emissions.

However, overall inflation would likely decrease, and SOL could even become deflationary over time, mitigating dilution for non-stakers and potentially improving $SOL's utility in DeFi.

This shift would mark a significant evolution in Solana's monetary policy, transitioning from fixed schedules to a more flexible and responsive model.

Solana’s Inflation Rate Could Drop Under Multicoin Proposal

🤖 Solana Virtual Machine

This deep-dive into Solana's SVM compares its multi-threaded, parallel processing capabilities to the Ethereum Virtual Machine (EVM), highlighting their fundamental differences and implications for developers.

It also talks about the key role of Sealevel, the technology that enables Solana to process transactions concurrently, and explains how localized fee markets further distinguish Solana from Ethereum’s global fee model.

For Solana developers, understanding the SVM is key to appreciating how its architecture supports dApps with unmatched efficiency.

By utilizing the full capacity of validator hardware, the SVM offers a game-changing alternative to the single-threaded EVM, which struggles with bottlenecks during peak demand.

This article will help deepen your understanding of what sets Solana apart from other blockchains and how the SVM opens new possibilities for dApp development.

Solana Virtual Machine (SVM): The Engine Behind Solana’s Speed

💰 Multicoin's Solana Thesis

Multicoin Capital’s latest thesis, authored by Kyle Samani, examines how Solana can play a central role in building what they describe as Internet Capital Markets.

The report focuses on how Solana’s technology and ecosystem have matured to address challenges in finance, with an emphasis on efficiency, accessibility, and scalability.

Since its early days in 2018, Solana has grown significantly, now valued at $100 billion.

It has one of the fastest-growing developer ecosystems and has surpassed Ethereum in several key metrics, including trading volumes and daily active addresses.

Multicoin views Solana as a platform capable of outperforming TradFi systems, not just on cost and speed, but also by retaining blockchain-native features like permissionless access and composability.

A central argument is that Solana has the potential to reduce financial services fees by up to 99% while still increasing its market cap to exceed major financial incumbents.

The thesis explains that while payments are not a primary revenue driver for blockchains, they are essential for adoption.

Solana’s transaction fees are extremely low, making it far cheaper than traditional payment systems. This affordability, coupled with its ease of use, encourages the growth of wallet adoption and ecosystem engagement.

Some of the key factors that Kyle highlights in this report are:

Introduction of Conditional Liquidity to tighten spreads and reduce risks for market makers
Implementation of Multiple Concurrent Leaders to decentralize price discovery and reduce latency
Capable of handling traditional assets, crypto-native assets, and new financial instruments
Revenue and Value Growth Through MEV
Expanding Total Addressable Market
Expected to play a larger role in global finance as blockchain adoption grows

The report describes Solana’s broader goal as creating a permissionless financial system that integrates low fees, global accessibility, real-time auditability, and composability.

While Solana serves as the infrastructure, its ecosystem is designed to support both traditional and crypto-native assets while enabling new market opportunities.

The Solana Thesis: Internet Capital Markets

⚡ Quick Hits

The Resources You Need to Grow Your Crypto Startup From 0 to 100 - @solana

Metaplex Core, the next-generation standard for NFTs on Solana - @dfrvci

The Truth about Solana Local Fee Markets - Helius

SIMD-0212: Slashing On Solana - Anza

How to Create a Telegram Agent With Solana Agent Kit (Video) - yuki

Solana's RWA Tokenisation Ecosystem by Asset Category - @AgriDexPlatform

Introducing Agentic Blinks - @sendaifun

What's New in Backpack Wallet - @Backpack

Introducing New Filters on Solscan's Transactions Tab - @solscanofficial

⚙️ Tools & Resources

Pinocchio is a zero-dependency library to create Solana programs that eliminates the dependency on the solana-program crate to write on-chain programs, which are optimized in terms of both compute units consumption and binary size.

p-token is a proof-of-concept of a fully-compatible reimplementation of the SPL Token program using Pinocchio

LiteSVM is a fast and lightweight library for testing Solana programs that creates an in-process Solana VM optimized for program developers making it much faster to run and compile than alternatives like solana-program-test and solana-test-validator.

Solana Wallet Adapter Base UI (ShadCN) is a modular and customizable wallet adapter UI built with shadcn/ui and TailwindCSS that addresses limitations in @solana/wallet-adapter-react-ui around UI and UX customization.

💸 Funding

Phantom has raised a $150 million Series C funding round at a $3 billion valuation to drive innovation, strategic acquisitions, and partnerships to modernize consumer finance, enhance wallet infrastructure, and expand peer-to-peer payment and social discovery features.

👩‍🔧 Get Hired

Helius is hiring a Principal Platform Engineer and Senior Software Engineer to build the infrastructure to support a suite of developer tools and services.
Crossmint is hiring a Developer Growth, Web3 Startups (US) to be the face of Crossmint to the developer community and bring early-stage web3 startups to the platform.
Perena is hiring a Senior Backend Engineer to build and scale professional-grade applications across multiple platforms.
Parity Finance is hiring a Senior Protocol + Full Stack Engineer to build the Parity liquid staking platform and trading infrastructure.

🎧 Listen to This

Lightspeed

This episode of Lightspeed covers how Solana performed over the weekend as Trump launched his meme coin, the record on chain activity that occurred, how Solana managed to perform, the impact of Jito, and what happened with Coinbase.

Solana's All Time High Chain Activity

Bonus Episodes

Helium Mobile: World's First Crypto Carrier on Solana with Coco Tang - The Index

In this episode Alex Kehaya talks with Coco Tang, General Manager of Helium Mobile, about how blockchain is revolutionizing the telecom industry, Helium’s origins as an IoT network, and its ambitious leap into mobile infrastructure

The Encrypted Supercomputer with Yannik from Arcium - DCo Podcast

In this episode, Arcium CEO Yannik discusses a groundbreaking approach to privacy in crypto, rejecting the need for separate "privacy chains" like Zcash in favor of an encrypted supercomputer that acts as a trustless, plug-and-play privacy layer for applications

Follow @mikehale on X or Warpcast!