- A recent proposal voted for a massive fee design change for validators.
- Validators are now to get 100% of priority fees on Solana.
As an experienced financial analyst, I closely follow the developments on various blockchain networks, including Solana (SOL). The recent proposal, SIMD-0096, which passed with a 77% majority, mandates that validators will now receive 100% of priority fees on the network. This change is significant as it differs from the previous arrangement where fees were split 50/50 between being burned and rewarding validators.
A new proposition approved on the Solana [SOL] network recently enacts a rule where validators will now collect the entirety of the transaction priority fees. This adjustment arises due to escalating network fees, causing apprehension regarding the possible repercussions for SOL.
Solana validators to get more fees
As a crypto investor engaged with the Solana community, I’ve come across a proposition that piqued my interest: validators receiving 1100% of the priority fees on the network (yes, you read that right). This proposal, named SIMD-0096, was put up for a vote ending on May 27th. With an impressive 77% approval rate from the community, it seems we’ve collectively given this idea a green light.
As a analyst, I would describe the difference between the old and new models by saying: In the earlier version, fees were evenly divided between being paid as gas to the network and being distributed as rewards to validators. However, in this updated model, the fee distribution mechanism has been altered.
As a researcher working on the implementation of the new allocation model for Solana’s Mainnet-Beta, I must admit that it is an exciting development. However, it will take several months before this feature becomes accessible to the public. At present, it remains unavailable in the current version of Solana’s Mainnet-Beta software.
Moving forward, upcoming editions like versions 1.17 and 1.18 are predicted to incorporate this particular feature. Additionally, there are plans to introduce other advancements, including the SIMD-0123 proposal, which focuses on improving the block reward distribution.
On the Solana blockchain, transactions incur priority fees for those aiming for quicker processing, particularly during congested trading periods.
Validators give priority to these transactions within the network to uphold efficiency.
Could Solana become more inflationary?
As a researcher examining the Solana network, I’ve noticed that before and after the implementation of the new proposal, certain community members have raised concerns regarding its possible inflationary effects on the SOL token.
In the present setup, half of the fees get destroyed, leading to a decrease in the circulating supply of SOL. This deflationary effect, theoristically, could boost the value of each SOL unit.
An analysis given by a validator reveals that the inflation rate is projected to increase to 5.2%, up from the present rate of 4.97% compounded, upon completion of the proposed implementation.
How the fees on Solana have trended
A thorough examination of DefiLlama’s data on Solana’s transaction fees revealed a noticeable surge starting in March, reaching a high of over $3 million on the 17th of that month.
Fees dropped significantly, dipping below the $1 million mark, but have since rebounded. Now, $1 million represents a benchmark.
At present, the fees amount to more than $1.8 million. This suggests a significant increase in network activity recently, leading to elevated transaction costs.
SOL moves between gains and losses
On the 27th of May, Solana’s price as observed by AMBCrypto in its daily analysis experienced a growth of more than 4%.
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.
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2024-05-29 00:07