100% of priority fees are allocated by Solana validators, terminating the 50/50 burn split

  • With 77% of the vote, the SIMD-0096 proposal was approved.

On May 27, Solana validators cast a vote to take 100% of priority fees for themselves, abolishing the previous 50/50 split between validator rewards and burning fees.

With 77% of the vote, the SIMD-0096 proposal was approved. It attempts to align incentives for network efficiency and security and fix alleged shortcomings in the current architecture.

The goal of the priority fee allocation change is to lessen the possibility of side transactions between block producers and transaction submitters, which some claim could compromise network security.

The update was supported by validators including Everstake, Jito, Helius, Stakehaus, Leapfrog, Bonk, Solend, and Pico.sol.

Validators that opposed the plan included Step Finance, Triton, GREED, Solana Compass, Shinobu, Orangefin, AG, Pumpkin Pull, and Edgevana.

A system bug

A number of opponents, like Bandito Stake’s Hanko Baggins, expressed worry over the removal of the burn mechanism, which controls Solana’s annual inflation rate.

While higher fees would help validators immediately, according to Baggins, the elimination of the burn could have a negative long-term effect on the network’s viability and drive down the price of SOL.

In response, Solana co-founder Anatoly Yakovenko said that in order to outbid tips, which travel only to validators and are not burnt, users must pay double the priority cost. He labeled the fire of priority fees as a system glitch.

According to Laine of Stakewiz, the adjustment might cause Solana’s issuance to rise by 4.6%, bringing it in line with levels from a year ago. He underlined that SIMD-0096 and other ideas like SIMD-0123 are being developed as part of a larger scheme to enhance block reward distribution.

Implementation delays

The vote is over, however it might take some months to activate SIMD-0096 because it isn’t supported by the current Solana Mainnet or the next upgrade.

The postponement permits more deliberation and formulation of other suggestions, such SIMD-0123, which seeks to optimize the distribution of block rewards, and SIMD-0109, which suggests a native tipping system.

The choice to provide validators all of the priority fees emphasizes the diversity of viewpoints present in the Solana ecosystem and paves the way for continued dialogue over the network’s future.

The decision was made in the midst of increased interest in Solana, which saw a sharp increase earlier in March to a local high of $210. In recent weeks, the network has also seen the biggest trade volume.

Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Lalit Mohan

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