Solana validators will now receive 100% of priority fees, a significant increase from the previous 50% allocation. The Solana community has approved the governance proposal, known as SIMD-0096, with 77% of votes in favor, according to on-chain governance data. Validators play a crucial role in the Solana blockchain network by confirming transactions and maintaining network security. Priority fees are additional fees that users can pay to expedite transaction processing during periods of high network congestion.
Previously, the network divided priority fees, with 50% being burned and the other 50% going to validators. However, the proposal creator, tao-stones, argued that this incentivized validators to engage in opaque “side deals” with users to secure more fees. By allocating 100% of priority fees to validators, the focus will be solely on network performance and security, eliminating the potential for “side deals” and improving efficiency.
While the proposal has been approved, it has also sparked a debate within the Solana community. Some members, including validators like Stakewiz, have expressed concerns about the potential inflationary impact of introducing more SOL tokens into circulation without burning any fees. Stakewiz estimates that this change could increase SOL’s issuance by 4.6%, contributing to inflation. However, others support the proposal, believing it will eliminate opaque “side deals” and create a more transparent and fair fee structure for users.
Implementing SIMD-0096 will not be immediate, as it requires subsequent software releases to incorporate the necessary changes. This delay provides an opportunity to further develop and integrate a more comprehensive fee distribution system, as proposed in SIMD-0123. Solana’s co-founder, Anatoly Yakovenko, has stated that the update could enable stake pools with programmatically frozen tokens to receive all priority fees and tips. However, this mechanism would take approximately 6 months to 1 year to become operational.
In response to this development, the Solana (SOL) token has seen a positive price movement. At the time of writing, SOL is trading at $168.9, representing a 5.56% increase from its intraday low. Additionally, SOL’s market capitalization and 24-hour trading volume have experienced notable increases of 5.59% and 9.47%, respectively.
Overall, the Solana community’s approval of allocating 100% of priority fees to validators reflects a desire to enhance network performance, eliminate opaque practices, and promote a fair fee structure. While concerns about potential inflation persist, the positive price reaction of SOL suggests optimism among investors. The gradual implementation of the proposal also presents an opportunity for further improvements and the integration of a more comprehensive fee distribution system.