Solana votes to shake up its tokenomics and burn 10x more SOL

The price of Solana is tumbling, but the network keeps running at full speed. This strange antithesis of the crypto market reveals a paradoxical reality for investors. Developers are working tirelessly to rethink the SOL economy, while traders are massively shunning the token. A historic vote opens today to decide the future of the network. Burning ten times more SOL and halving inflation are the main stakes of this consultation. But small validators tremble for their survival in the face of these radical changes.

Torching SOL: Solana’s tenfold burn gamble

Proposal SGP-0003 takes no prisoners, it aims to radically transform Solana’s economy. This text combines two major improvements, SIMD-0550 and SIMD-0553, to tighten the SOL supply on the markets. SIMD-0553 introduces resource-based fees, all of which are permanently burned.

Concretely, daily burnings would go from 650 SOL to 7,500 or 9,000 SOL, a tenfold increase. SIMD-0550 doubles the annual disinflation rate from 15 to 30%, which would enable reaching a terminal inflation of 1.5% in 2029, three years earlier than planned.

“Reducing emissions helps everyone holding SOL long term“, states lostin, the author of SIMD-0550. Helius, Jupiter, Drift, and Solana Compass are among the major supporters. The 15% stake threshold has already been crossed with 65.22 million SOL.

Small validators vs the whales: the staking war rocking crypto

Behind the enthusiasm displayed by the giants of the crypto ecosystem, a silent battle opposes Solana stakers. lostin himself acknowledges that small validators could vote against the proposal, as reducing emissions would severely impact their already fragile income. Some suggest introducing a minimum commission of 2 or 5% to protect the smallest.

A bitter memory hangs over this: SIMD-0228 was rejected at 38.61% due to similar concerns. Helius alone accounts for nearly two-thirds of the current support, a concentration that raises questions about power balance in the network. Small validators fear an “immediate extinction” if the overhaul is adopted without a safety net.

The fate of this proposal rests on a precarious balance between the interests of major players and the survival of the smallest. This antithesis could well decide the economic future of Solana.

SIMD-0553: the more complex the transaction, the more SOL gets torched

The technical core of this crypto overhaul relies on a clever burning mechanism designed by cavemanloverboy. 0.1 lamport, that is one billionth of SOL, is burned per unit of requested cost, meaning that the more complex the transaction, the more SOL it consumes.

Non-computationally intensive operations, such as market makers updates, will be spared to preserve Solana’s competitive advantage in high-frequency trading.

“We don’t want to destroy Solana’s competitive advantage for high-frequency trading“, assures cavemanloverboy, who already orchestrated a 100,000 TPS test on the network. Upcoming technical improvements, like Alpenglow, could accelerate burnings.

Yet, Solana still emits 60,000 SOL per day, and even with 9,000 SOL burned, the blockchain will not become deflationary.

Key figures of the historic vote

• SOL price at the time of writing: 74.03 dollars
• Current burnings: ~650 SOL/day
• Projected burnings: 7,500-9,000 SOL/day
• Terminal inflation: 2029 (vs 2032)
• Support threshold: 65.22 M SOL

SOL price tanks as tokenomics overhaul hits high gear

SOL trades around 74 dollars, far from its all-time high of 293 dollars, a dizzying gap in the crypto universe. Predictive markets are particularly pessimistic: 70% of traders bet on a drop to 40 dollars before any sustained rebound.

The Chaikin Money Flow is negative at -0.17, a sign that capital is leaving the Solana ship. Moving averages are all bearish, with major resistance at 76.79 dollars.

Liquidations concentrate near 71.50 dollars below and 73.50-74.50 above. The market seems to ignore the promises of improved tokenomics, preferring to focus on the current weakness of crypto.

SOL bounces. But spot demand is flat. Sign of weakness.

Ted Pillows

Are investors right to be so pessimistic, or is the SGP-0003 proposal widely underestimated by the crypto community?

Solana impresses the crypto-sphere, even without matching Ethereum on all fronts. Europe is already conquered, the rest of the world will likely follow. This tokenomics overhaul could accelerate the expansion of the Solana network. The ambition is global, and it seems within reach.