Solana
Solana Validators Approve 100% Priority Fee Allocation, Ending 50/50 Burn Split
Solana validators voted to award themselves 100% of priority fees on May 27, ending the previous 50/50 split between hot fees and validator reward.
The proposal, known as SIMD-0096, adopted with 77% approval. It aims to address perceived flaws in the current system and align incentives for network security and efficiency.
The change in priority fee allocation aims to reduce the risk of side deals between transaction requesters and block producers, which supporters say could harm network security.
Validators such as Everstake, Jito, Helius, Stakehaus, Leapfrog, Bonk, Solend and Pico.sol supported the change.
Meanwhile, validators including Step Finance, Triton, GREED, Solana Compass, Shinobu, Orangefin, AG, Pumpkin Pull, and Edgevana opposed the proposal.
Bug in the system
Critics, like Hanko Baggins of Bandito Stake, have expressed concerns about the removal of the combustion mechanism, which helps manage Solana’s annual inflation rate.
Baggins suggested that while increasing fees could benefit validators in the short term, removing burn could impact the long-term health of the network and drive down the price of SOL.
Co-founder of Solana Anatoly Yakovenko responded to these concerns, stating that the current system requires users to pay double the priority fee to outbid on tips, which go entirely to validators and are not burned. He described priority burning of fees as a bug in the system.
Stakewiz’s Laine estimated that this change could lead to a 4.6% increase in Solana’s emissions, bringing them in line with levels a year ago. He highlighted that SIMD-0096 is part of a broader plan to improve the distribution of block rewards, with other proposals like SIMD-0123 also under development.
Implementation delayed
Although voting is complete, it may take several months to enable SIMD-0096 because the current Solana mainnet or upcoming upgrade does not support it.
This delay allows for continued discussions and development of additional proposals, such as SIMD-0123, which aims to streamline the distribution of block rewards, and SIMD-0109, which proposes a native tipping mechanism.
The decision to allocate 100% of priority fees to validators highlights the varied perspectives within the Solana ecosystem and sets the stage for ongoing discussions about the future of the network.
The move comes in the middle growing interest in Solana, after its meteoric rise to a local high of $210 earlier in March. The network also recorded the highest trading volume these last weeks.