In brief
- Solana validators are considering a proposal to increase daily SOL burns through a new fee model.
- A companion proposal would accelerate the network's declining inflation schedule.
- The proposal is close to reaching the support needed to advance to a formal vote.
Solana validators are close to advancing a governance proposal that would sharply increase the amount of SOL burned each day while reducing the rate at which new tokens enter circulation.
If implemented, the proposal would therefore limit the network tokens inflation rate, thereby limiting supply and, in theory, could lead to an increase in the price of Solana tokens if demand remains steady or increases.
The proposal, SGP-0003, combines two previously introduced Solana Improvement Documents into a single governance package aimed at tightening SOL's supply. SIMD-0553 would introduce resource-based transaction fees, increasing daily SOL burns from about 650 SOL (roughly $48,000) to between 7,500 and 9,000 SOL (up to about $668,000), depending on network activity. SIMD-0550 would also double Solana's annual disinflation rate to 30%, bringing the network's 1.5% inflation floor forward from 2032 to 2029.
A token burn permanently removes cryptocurrency from circulation by sending it to an unusable wallet address. By pairing larger burns with lower issuance, the proposal would reduce the growth of SOL's circulating supply.
The proposal is in Solana's support phase and must secure backing from validators. As of Tuesday morning, it had support from 63 million SOL, or just over 14.4% of the network's staked supply, leaving about 3 million SOL needed to reach the threshold of 65.16 million SOL before the Aug. 18 deadline.
According to the Solana Validator Governance dashboard, to date, the proposal has 73 supporters, including Helius, Jupiter, Staking Facilities, Drift, OtterSec, and Solana Compass.
big news
the solana deflation & burning proposals will go to an early vote starting tomorrow
if they get at least 15% of stake to signal support, they'll go to a final vote after that
if you're a node or holder that want these on Solana, show support fast
The higher burn rate alone would not make SOL deflationary. Solana currently issues about 60,000 SOL per day. The companion issuance proposal is designed to reduce new supply while the fee changes increase the amount of SOL permanently removed from circulation.
If the proposal reaches the required support threshold, it will advance to the discussion phase before a formal validator vote.
Solana, which trades as SOL, is currently changing hands for around $74 at a $43 billion market capitalization. The native token of the Solana network is up slightly on the day, but still a considerable way off from its all-time high of $293 that it reached over a year ago.
Traders on Myriad, a prediction market developed by Decrypts parent company Dastan, remain bearish on the token as of yet, placing 70% odds that SOL drops to $40 before recovering to $160.
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