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Solana Vote Approves 100% Priority Fee Allocation to Validators

Solana community votes to allocate 100% of priority fees to validators, moving away from the 50/50 burn and reward model.
Solana Vote Approves 100% Priority Fee Allocation to Validators

Highlights

  • Solana community votes for 100% fee allocation to validators.
  • SIMD-0096 passes with 77% support, ending SOL token burning.
  • Future Solana updates to integrate SIMD-0096 alongside SIMD-0123 for fee distribution.

Solana has passed a proposal known as SIMD-0096, allowing 100% of priority fees to be allocated to network validators. This decision marks a departure from the previous model, where fees were split 50/50 between being burned and rewarding validators.

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Solana Approves 100% Priority Fee Allocation

The latest voting has ended with the result of 77% of votes for the proposal, which shows the support from the side of validators. This change is intended to increase the rewards for validators, which are the nodes responsible for the network’s reliability and performance.

In a statement made by Solana Labs Co-Founder, Anatoly Yakovenko, this update could enable stake pools with programmatically frozen tokens to be able to obtain all the tips and priority fees.

For now, it will take several months to adopt this new allocation model as it is not available in the current version of Solana’s Mainnet-Beta software. Subsequent releases, such as 1.17 and 1.18, should include this feature as well as other enhancements such as the SIMD-0123 proposal to further optimize block reward distribution.

As a result, this delay creates a window in which the fee distribution system can be further developed and integrated as proposed in the SIMD-0123.

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Community Response and Implications

Priority fees in the Solana network are charged by users that want their transactions to be processed faster, especially during the rush hours. In this way, validators prioritize these transactions to guarantee the proper functioning of the network. 

Prior to this, 50% of these fees were burned, which some deemed as having a deflationary impact on the Solana token (SOL). All priority fees will go to the validators under the new model, which could increase their revenue but at the same time may also raise concerns over more tokens being created and resulting in inflation.

Therefore, the decision has elicited divergent reactions within the Solana community. Some members and validators have raised concerns over inflationary pressures that may result from the transition from burning fees to rewarding them in their entirety to validators.

A validator, Stakewiz, has voiced his opinion regarding the problem of Solana token expansion and its connection with inflation, predicting a 4.6% boost. They have emphasized that the activation should be gradual, and the activation of SIMD-0096 should be done simultaneously with the activation of SIMD-0123 to avoid any adverse financial effects.

On the other hand, there are those in the community who support the change, saying that it will do away with off-chain side deals that are hard to follow, and will make the fee structure more transparent and fair.

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Solana Price Trend

Amid this development, the Solana (SOL) price has seen a bullish shift with the price exchanging hands at $170.53, a 5.56% surge from the intra-day low.

Concurrently, SOL’s market capitalization and 24-hour trading volume surged by 5.59% and 9.47% to $76,662,006,334 and $2,633,171,068, respectively.

Read Also: Top 4 Altcoins To Buy As Bitcoin Price Prepares For $100,000 Bull

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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