A new governance proposal on the Solana blockchain seeks to dramatically increase daily SOL burns from around $47,000 to as much as $650,000. This initiative, known as SGP-0003, combines a fee restructuring with a doubling of the disinflation rate. To advance to a vote, it requires an additional 40 million SOL in validator support within two weeks.

Details of the Proposal

Validators on Solana are backing two related governance proposals, SIMD-0550 and SIMD-0553, which aim to enhance the burning of SOL while decreasing its issuance. SIMD-0553 introduces resource-based transaction fees, which could elevate daily SOL burns from approximately 650 SOL to between 7,500 and 9,000 SOL, resulting in a potential daily burn value of around $650,000. Meanwhile, SIMD-0550 proposes to double the existing disinflation rate to 30%, accelerating the timeline for reaching a 1.5% terminal inflation rate to 2029, three years sooner than previously planned. This change is expected to remove about 18.9 million SOL from circulation over the next six years, valued at approximately $1.36 billion.

Current Support and Requirements

As it stands, the proposal has garnered support from 24.94 million SOL, which is roughly 5.8% of the total 432.65 million SOL staked. However, an additional 40 million SOL must be secured to reach the 15% signaling threshold necessary for a vote scheduled for August 18. Currently, 16 validators, including Helius, which has contributed the majority of support with 16.03 million SOL, are backing the proposal. Despite the anticipated increase in SOL burns, analysts suggest that it may not significantly impact overall SOL issuance. Even at the higher estimate of 9,000 SOL burned daily, this would still fall short against a daily inflation of approximately 60,000 SOL. Thus, the proposals are designed to work together: SIMD-0553 boosts the burn rate while SIMD-0550 reduces issuance.

Conclusion

The Solana Foundation has set the 15% threshold to gauge validator interest in significant proposals, ensuring that only those of major concern proceed to a vote. With two weeks left, additional support from validators is crucial for the advancement of these proposals, which aim to reshape the economic dynamics of the Solana network.