Solana validators are considering a proposal to significantly increase daily SOL burns and reduce new token issuance, aiming to stabilize the token's price.
Key Proposal Under Review
The Solana network is evaluating a significant governance proposal aimed at increasing the daily burn rate of its native token, SOL. This initiative seeks to implement a new fee structure that could elevate SOL burns dramatically.
Proposed Changes and Impact
Known as SGP-0003, the proposal combines two previous Solana Improvement Documents to tighten the supply of SOL. If approved, daily burns could surge from approximately 650 SOL, valued at around $48,000, to between 7,500 and 9,000 SOL, potentially reaching about $668,000.
Furthermore, the plan includes provisions to enhance the network's annual disinflation rate, moving it from 1.5% to 30% by advancing the timeline for reducing the inflation floor to 2029 instead of 2032. This dual approach could stabilize or even boost SOL's price if demand remains strong.
Current Support Status
As of the latest updates, SGP-0003 has received backing from 73 validators, amassing approximately 63 million SOL, which accounts for 14.4% of staked supply. The proposal needs 65.16 million SOL by August 18 to proceed to a final vote. Supporters include major entities like Helius, Jupiter, and Drift.
“Big news: the Solana deflation & burning proposals will go to an early vote starting tomorrow. If they secure at least 15% of stake support, they will proceed to a final vote.”
- Mert (@mert) on X
While these changes could significantly reduce the influx of new tokens, it’s important to note that an increased burn rate alone won’t lead to a deflationary state for SOL, as approximately 60,000 SOL are currently issued daily. Both the proposed fee structure and issuance changes are designed to work in tandem, ultimately aiming to slow the growth of the circulating supply.
As of now, SOL is trading at around $74, with a market cap of $43 billion—significantly lower than its all-time high of $293 from last year. Market sentiment appears bearish, with traders estimating a 70% likelihood of SOL dropping to $40 before recovering to $160.
