Solana validators have approved a plan that will reduce the creation of new SOL, and this could reduce the future issuance by 18.9 million over six years.
Two other votes remain open. One would establish a formal governance system for Solana, while the other could change how people pay to use the network.
Solana will create new SOL more slowly
One of the proposals, SGP-0002, doubles the rate at which Solana gradually reduces token issuance.
Solana will continue creating new SOL to reward people who help secure the network.But those rewards will now decline more quickly until annual inflation reaches its existing 1.5% floor.
The proposal estimates that Solana could issue around 18.9 million fewer SOL over the next six years, and it would also reach 1.5% in about 2.8 years instead of 5.7 years.
For SOL holders, slower supply growth could reduce how their holdings are diluted as a result of new SOL entering circulation. But it does not mean there will be a price increase, particularly if demand for SOL weakens.
People earning staking rewards could also receive less as time goes on, but it does not change validator commissions, transaction fees, or other sources of network income.
Major validators disagree over transaction fees
A separate proposal, SGP-0003, would change how Solana charges for transactions.
Users currently pay a standard fee based on the number of signatures attached to a transaction. The proposal would introduce a small fixed charge, then add another fee based on the network capacity the transaction requests.
Simple transactions could become cheaper, while more demanding transactions, or applications that reserve more capacity than they need, could pay more.
The additional fee generated would be destroyed rather than paid to validators. The move could remove between 1,500 and 9,000 SOL from circulation each day, depending on the rate that is eventually introduced.
Major validators have not reached the same conclusion about the plan.
Figment and Staking Facilities backed it, while Jupiter, Bitwise Onchain Solutions and Forward Industries voted against it. Helius, Kraken, Everstake and Kiln placed most or all of their voting stake in the abstain category.
The proposal looks at a new way of calculating fees with decisions about the fixed charge, how quickly rates should rise, and whether the proceeds should be destroyed, and this is why there is a lot of disagreement.
SGP-0003 remained above its required approval level at the time of the snapshot, but voting was still ongoing.
SGP-0001, which is Solana’s constitution proposal, would establish formal rules for future network decisions and allow individual stakers to override the position taken by their validator. It had seen a broader support, with 89.17% of participating stake voting in favour.
Final Summary
- Solana approved a faster reduction in new SOL that is issued, and it could remove 18.9 million from future supply.
- The other proposals are still open, with division over the fee changes.
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