Solana validators have voted to pass Solana Improvement Document number 96 (SIMD-0096), which proposes that 100% of priority transaction fees will be awarded to validators. This breaks the current model that passes only 50% of these funds to validators, while the other half gets burned. According to early estimations, this will increase inflation by 4.6% when implemented.
Solana Passes Proposal to Assign 100% of Priority Fees to Validators
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Solana Passes Priority Fee Distribution Change Proposal; Will Assign 100% to Validators
Solana Improvement Document number 96 (SIMD-0096), which proposes to modify the current network priority fee distribution mechanism, has been passed with 77% in favor. The approved document proposes to break the current 50/50 distribution of these fees, where half gets assigned to validators, while the other half gets burned.
The proposal alleges that the new distribution comes to fix the current incentive structure that encourages side deals between transaction submitters and validators. However, the proposal’s impact on the network issuance has split the Solana validator community, with some validators favoring it and some strongly rejecting it.
Validator Bandito Stake rejected the proposal, explaining that while validators would benefit directly from this change, removing the burn mechanism “has the potential to have a serious impact on the 1.5% yearly inflation that’s baked into Solana’s tokenomics.”
Laine, a Solana validator, offered more details on the effects of the future implementation of this proposal in Solana’s issuance curve. According to calculations, the proposal would cause an issuance increase of 4.6% compared to today’s model. This means inflation would be approximately the same as the last year when priority fees did not exist.
The validator stressed that SIMD-0096 was “one key in a multi-factorial rethinking of how rewards can be better and more broadly shared with all stakers who help secure the network.”
However, implementing these changes will have to wait, as Laine explained that neither the current software for Solana’s mainnet nor the upcoming version supports this change. At best, the new distribution changes will be included in the next months, Laine concluded.
What do you think about assigning 100% of transaction priority fees to Solana validators? Tell us in the comments section below.
