In a significant change from its predecessor, Solana (SOL) has adopted a proposal known as SIMD-0096 that would allow the entirety 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 burning and rewarding validators.
The final vote resulted in 77% of votes in favor of the proposal, indicating strong support from validators. This change aims to increase rewards for validators, the nodes responsible for the reliability and performance of the network.
In the statement made by Solana Labs Co-Founder Anatoly Yakovenko, it was stated that this update can enable staking pools with programmatically frozen tokens to obtain all tip and priority fees.
However, it will take several months for this new allocation model to be adopted as it is not available in the current version of Solana's Mainnet-Beta software. Later versions, such as 1.17 and 1.18, will include this feature as well as other improvements, such as the SIMD-0123 proposal to further optimize block reward distribution.
Priority fees on the Solana network are charged by users who want their transactions processed faster, especially during peak hours. Validators prioritize these transactions to ensure the smooth functioning of the network.
Previously, 50% of these fees were burned, which some felt had a deflationary effect on the Solana token (SOL). Under the new model, all priority fees will go to validators, which could increase their revenue but could also raise concerns about more tokens being created and causing inflation.
Stakewiz, a validator, expressed his opinion on the Solana token expansion issue and its connection to inflation, predicting a 4.6% increase in token inflation.
*This is not investment advice.
