Connect with us
Active Currencies 14734
Market Cap $2,583,682,995,475.70
Bitcoin Share 51.46%
24h Market Cap Change $0.47

How Solana’s latest fee proposal could affect SOL’s inflation

2min Read

Solana validators are now to get 100% of the priority fees, which has sparked concerns about the inflationary effect on SOL. 

How Solana's latest fee proposal could affect SOL's inflation

Share this article

  • A recent proposal voted for a massive fee design change for validators.
  • Validators are now to get 100% of priority fees on Solana.

A recently passed proposal on the Solana [SOL] network mandates that validators will now receive 100% of the priority fees. This change comes as network fees have increased, raising concerns about its potential impact on SOL.

Solana validators to get more fees

A proposal presented to the Solana community suggested that validators should receive 100% of the priority fees on the network. On 27th May, voting concluded with 77% in favor of the proposal, known as SIMD-0096. 

Also, this new model differs from the previous one, where fees were split 50/50 between being burned and rewarding validators.

However, it will take several months to implement this new allocation model. It has yet to be available in the current version of Solana’s Mainnet-Beta software. 

Furthermore, future releases, such as versions 1.17 and 1.18, are expected to include this feature. Also, other enhancements, such as the SIMD-0123 proposal, which aims to optimize block reward distribution, will be included.

Priority fees on the Solana network are charged to users who want their transactions processed faster, especially during periods of high trade traffic. 

This system ensures that validators prioritize these transactions to maintain the network’s efficiency.

Could Solana become more inflationary? 

Before and after the passage of the new Solana proposal, some community members have expressed concerns about its potential inflationary impact on SOL. 

Under the current arrangement, 50% of the fees are burned, reducing the amount of SOL in circulation and making SOL more deflationary, which should theoretically increase its value. 

However, a validator provided an analysis indicating that the net inflation rate will rise to 5.2% from the current compound inflation rate of 4.97% once the proposal is fully implemented.

How the fees on Solana have trended

An analysis of Solana’s fees on DefiLlama showed a significant increase around March, peaking at over $3 million on 17th March. 

After a steep decline that brought fees below $1 million, they have since risen again, with $1 million now serving as a threshold. 

Solana fees

Source: DefiLlama

As of this writing, fees are over $1.8 million, indicating a recent surge in network transactions, resulting in higher fees.

SOL moves between gains and losses

AMBCrypto’s analysis of Solana’s daily timeframe price trend showed that SOL saw an increase of over 4% on 27th May. 

Solana price trend

Source: TradingView


Read Solana (SOL) Price Prediction 2024-25


It rose by 4.15% from approximately $163 to over $170 by the end of the trading session. 

However, more than 2% of that gain has been lost since then, and SOL is now trading at around $166.

 

Share

Adewale is a full-time journalist at AMBCrypto. While he is increasingly fascinating by the world of blockchain and cryptocurrencies, Adewale holds a degree in International Relations. Besides working on insightful articles that touch upon the crypto-space's hottest issues, he finds joy in supporting Manchester United and Afrobeat music.
Read the best crypto stories of the day in less than 5 minutes
Subscribe to get it daily in your inbox.
Please check the format of your first name and/or email address.

Thank you for subscribing to Unhashed.