Solana validators support proposals to destroy 14 times more SOL per day and accelerate deflation

Solana Ecology News

Solana (SOL) validators are moving towards a formal governance vote on a proposal package that will also increase the amount of SOL destroyed daily and reduce the speed at which new tokens enter circulation.

This proposal package, called SGP-0003, combines two separate Solana improvement documents into a governance proposal aimed at tightening the supply of tokens from both sides of supply and demand.

As of August 4, SOL was trading at approximately US$74, with a market value of approximately US$43 billion. The token is well below its all-time high of $293 reached more than a year ago. Proponents of the proposal believe that if demand remains stable or grows, tightening supply dynamics may help boost the long-term value of the tokens.

What will the two proposals actually change

The first improvement document SIMD-0553 will reconstitute the way transaction fees are calculated. Under the current system, Solana charges a fixed base fee for each transaction, half of which is destroyed. SIMD-0553 will replace this practice with a resource-based fee model, charging based on the network resources actually consumed by the transaction. Under this structure, daily SOL destruction will increase from approximately 650 SOL (approximately US$48,000 at current prices) to 7,500 to 9,000 SOL per day (approximately US$668,000). This means a 12 to 14-fold increase in daily destruction. The new fee structure also introduces a fixed inclusive fee of 2,500 lamports per transaction, paid directly to block producers, separating the basic compensation from the destruction component.

The second document, SIMD-0550, targets new token offerings rather than existing supplies. It doubled Solana's annual deflation rate from 15% to 30%, which means the rate at which inflation fell twice every year. Solana's long-term inflation target of 1.5% remains unchanged, but the network will reach this lower limit in 2029 rather than 2032 under the current plan. Over six years, the accelerated decline is expected to reduce future issuance of approximately 18.9 million SOLs, bringing total supply approximately 2.6% below the current path. The 18.9 million SOL coins were not removed from current circulation, but represented coins that would never be issued at all.

The two proposals jointly regulate supply in opposite directions. SIMD-0553 increases the number of SOLs that are permanently removed through network activities, while SIMD-0550 reduces the number of new SOLs that enter circulation through pledge rewards. With continued high network usage, analysts associated with the proposal believe that net supply growth may fall below the 1.5% terminal target in the later period, creating a period of contraction in SOL supply.

Voting progress and supporters

The proposal is currently in the support stage, at which time the verifier expresses his intention to support before entering a formal pledge weight vote. As of August 4, the proposal has received support from 63 million SOLs, accounting for approximately 14.4% of the online pledge supply. It needs to meet the threshold of 65.16 million SOL units before the August 18 deadline. As of writing, the gap is approximately 3 million SOLs. Among the 73 validators that have expressed support are Helius, Jupiter, Staking Facilities, Drift, OtterSec and Solana Compass.

DeFi Development Corp. (NASDAQ: DFDV)--The first listed company in the United States to use accumulating SOL as a treasury strategy announced its support for SIMD-0550 and SIMD-0553 on August 4, and plans to vote in favor of both proposals as they advance. CEO Joseph Onorati said the proposals were a meaningful step towards a more sustainable economic model for Solana. "SIMD-0550 will reduce the amount of new SOLs entering circulation, while SIMD-0553 will increase the amount destroyed through network activities," Onorati said. The combination of the two can improve SOL's long-term supply dynamics and allow more value created by the network to be collected into tokens."

A previous more radical version of a similar proposal, SIMD-0228, failed to gain sufficient validator support in March 2025. The current proposal package is deliberately simplified in design, with SIMD-0550 changing only one parameter rather than completely refactoring the release model. This simplification is a response to previous failures. If the support threshold is reached before August 18, the proposal will move into the discussion stage, followed by a formal validator vote.