Overview
- Solana (SOL) has surged more than 8% in the last 24 hours and approximately 44% since the start of August, marking its best month since 2024, with the price climbing back above $105.
- This price rally coincides with the conclusion of the network's inaugural binding governance vote, which will determine whether to increase the disinflation rate and enhance daily SOL burn rates.
- Solana Company, traded on Nasdaq, supports the new governance structure but opposes the economic proposals, citing concerns over timing rather than disagreement with the objectives.
Solana is on the rise, with SOL increasing more than 8% in just one day and achieving a nearly 44% increase this month, pushing its price back above $105 for the first time since January 2024.
This upward trend coincides with the closing of a pivotal vote in Solana's history, which will decide on measures to reduce the issuance of SOL and significantly increase its burning rate.
Market participants appear to be anticipating a supply reduction even before the official results are in, indicating strong trader sentiment.
The voting process is set to conclude around 15:30 UTC today, marking the end of epoch 1023, which spans roughly two to three days of network operations. This vote encompasses three proposals under the new Solana Governance Proposals (SGPs), a groundbreaking on-chain system that allows validators and SOL delegators to cast binding, stake-weighted votes for the first time.
One of the proposals seeks to formalize a Solana Constitution that outlines the voting process going forward. The other two proposals will directly influence the economic landscape: SIMD-550 and SIMD-553.
Proposal SIMD-550: Reducing SOL Issuance
SIMD-550, introduced by engineers from Solana infrastructure company Helius, proposes to double the network's disinflation rate from 15% to 30%. Currently, Solana's inflation rate decreases annually, approaching a fixed floor of 1.5%. This adjustment could accelerate reaching that floor to 2029 instead of 2032, resulting in approximately 18.9 million fewer SOL being minted over the next six years.
However, this proposal comes with trade-offs. The reduction in issuance will impact staking rewards, which are derived from inflation. According to a 21Shares analysis, the staking yield could drop from around 5.25% today to about 2.25% within three years, akin to a Bitcoin halving but applied to staking. This could leave some smaller validators in a precarious position.
Proposal SIMD-553: Increasing SOL Burn Rate
SIMD-553, submitted by the R&D firm Temporal, addresses supply through burning, which involves sending SOL to an unspendable address, permanently removing it from circulation. This proposal would divide Solana's transaction fees into two components: a base "inclusion fee" for validator payments and a new "resource fee" directly tied to the computational resources consumed by a transaction, which would be burned.
This adjustment could increase Solana's daily burn rate from approximately 650 SOL (valued around $48,000) to as much as 9,000 SOL (approximately $668,000), representing a significant increase depending on network activity. The proposal has already passed code review by Solana's client teams, Anza and Firedancer, as of July 20, with today's vote determining its implementation.
Solana Company, listed on Nasdaq as HSDT, supports the constitution but is voting against both economic proposals, emphasizing that their concerns revolve around timing rather than the underlying goals, as stable yields are currently more critical for institutional stakers than hastening the reduction.
Solana Validator Governance
Voting is now underway for SGP 1, SGP 2, and SGP 3.
- SGP-0001: The Solana Constitution
- SGP-0002: Double Disinflation
- SGP-0003: Resource and Inclusion FeeVoting will remain open until the end of epoch 1023 (approximately 15:30 UTC on Thursday).
See the…
— Solana Developers (@solana_devs) August 23, 2026
Each proposal requires a two-thirds supermajority of participating stake to pass, and they are voted on separately, meaning one can be rejected without affecting the others.
Despite the governance discussions, the price momentum remains strong. SOL's 14-day RSI, a momentum indicator with levels above 70 often signaling overbought conditions, is currently around 84.5. The outcomes of today's voting are anticipated shortly after epoch 1023 concludes.