Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the recent proposal which passed on Solana giving validators 100% of priority fees.
Solana Proposal
On Monday the 27th of May 2024 it was revealed that Solana validators will receive a little more SOL tokens going forward following the successful passing of a governance proposal to give them 100% of priority fees. The vote saw 77% in favour of the proposal and will aim to cut out previous potential 'side deal transactions' between validators and submitters as the old format saw priority fees split between burning and rewarding validators.
Validators are important participants in a blockchain network given their role in confirming transactions via software they run, along with adding security to the network. The priority fees are additional fees users can pay to increase the likelihood of their transactions being processed quicker by the network. Previously, as noted above, half of the fees in a priority transaction were erased while the other half went to the validators. The 'side deals' created between transaction submitters and validators were being done so validators could gain more SOL, but this proposal ensures all the priority fees will now go to validators. This will also help to ensure validators are more focused on keeping the network safe and running smoothly.
The proposal was part of Solana Improvement Document number 96 (SIMD-0096) and has been implemented with a feature called Reward full priority fee to validators #34731.
One Solana validator noted that the SIMD-0096 proposal might negatively impact the Solana Network by making SOL more inflationary. Laine, the Solana staking validator, noted:
“The reality is that the current priority fee mechanism provides for side deals which create opacity and prevent free, transparent and equitable access to block space for all network participants.”
Given that the yearly issuance increase for Solana is 4.6%, Laine noted how the priority fees were absent in May 2023 and this would indicate that the effective inflation rate would be approximately 9.9% annually. SOL is up around 1.6% in the past 24 hours and trading at $168.66 at the time of writing, and there have been suggestions that a Solana spot exchange-traded fund (ETF) could be on the cards down the line in the United States.
During a recent episode of CNBC’s ‘Fast Money’, cryptocurrency investor and founder / CEO of the BKCM Digital Asset Fund, Brian Kelly noted that Solana could possibly be next, with Bitcoin, Ethereum and Solana considered the big three in his opinion. However, others are sceptical and believe more clear guidelines from Congress would be required along with a clear regulatory framework for cryptocurrencies beyond Bitcoin and Ethereum. With the SEC having officially approved 19b-4 applications from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise to issue Ethereum ETF's on the 23rd of May 2024, many will be keen to see which cryptocurrency, if any, is next.
Have a great day.
Peace. CryptoGod-1.
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