Solana votes to reform token economy, SOL destruction will increase 10 times

Solana prices fall, network is running at full speed: strange contrast in the crypto market

Solana prices are falling, but the network is still running at full speed. This peculiar contrast in the crypto market reveals the contradictory realities faced by investors. Developers are relentlessly rethinking SOL's economic model, while traders are dumping the token in large quantities. A historic vote to determine the future of the Internet opens today. Burning ten times the current amount of SOL and halving the inflation rate are the core issues of this vote. However, in the face of these radical changes, small validators are trembling for their survival.

Brief description

Solana is voting on proposal SGP-0003, which aims to increase daily SOL burning tenfold from 650 SOLs to 7,500 to 9,000 SOLs. The proposed SIMD-0550 doubles the annual deflation rate from 15% to 30%, thereby advancing the final inflation rate target from 2032 to 2029. Small Solana validators fear "immediate extinction" and may vote against reducing SOL emissions. The current SOL price is trading at US$74, well below its all-time high, and the market predicts that there is a 70% probability that it will fall to US$40.

Burning SOL: Solana's ten-fold burning bet

Proposal SGP-0003 is uncompromising and aims to revolutionize Solana's economic model. The text combines two major improvements-SIMD-0550 and SIMD-0553-to tighten the supply of SOL in the market. SIMD-0553 introduces resource-based fees, and all fees will be permanently destroyed. Specifically, daily combustion will increase from 650 SOLs to 7,500 or 9,000 SOLs, a tenfold increase. SIMD-0550 doubles the annual deflation rate from 15% to 30%, which will bring the final inflation rate to 1.5% in 2029, three years earlier than originally planned.

"Reducing emissions benefits everyone who holds SOL over the long term," said Lostin, author of SIMD-0550. Helius, Jupiter, Drift and Solana Compass are the main supporters. The 15% pledge threshold has been exceeded, and currently there are 65.22 million SOL supports.

Small Verifier vs Giant Whale: Pledge War in Shaking the Encrypted World

Behind the enthusiasm displayed by the crypto ecosystem giants, a silent battle is unfolding among Solana pledgers. Lostin acknowledged that small validators may vote against the proposal because reducing emissions would severely impact their already meager incomes. It has been suggested to introduce a minimum commission of 2% or 5% to protect the weakest validators. A painful memory hangs over all this: SIMD-0228 was rejected with a support rating of 38.61% over similar concerns. Helius and his family account for nearly two-thirds of the current support vote, a concentration that raises questions about the balance of power on the Internet. Small validators fear they face "immediate demise" if the reform is adopted without a safety net. The fate of the proposal depends on the delicate balance between the interests of big players and the survival of small validators. This contradiction could determine Solana's economic future.

SIMD-0553: The more complex the transaction, the more SOL burns.

The technical core of this crypto economic reform relies on a clever burning mechanism designed by cavemanloverboy. Each unit request cost will burn 0.1 lamport (or one billionth of SOL), which means that the more complex the transaction, the more SOL will be consumed. Non-compute-intensive operations, such as market maker updates, will be immune to the impact to maintain Solana's competitive advantage in high-frequency trading.

"We don't want to undermine Solana's competitive advantage in high-frequency trading," assured Cavemanloverboy, who has tested 100,000 TPS online. Future technological improvements, such as Alpenglow, may accelerate combustion. However, Solana still emits 60,000 SOLs per day, and even if it burns 9,000 SOLs per day, the blockchain will not become deflationary.

Key data for historic voting

Current SOL price: US$74.03
Current burn volume: approximately 650 SOL/day
Estimated burn volume: 7,500 - 9,000 SOL/day
Final inflation target time: 2029 (Originally planned for 2032)
Support threshold: 65.22 million SOL

Token economics reform is accelerating, SOL prices are under pressure

The current trading price of SOL is about US$74, far below the all-time high of US$293, which has created a huge gap in the crypto world. Forecasts are particularly pessimistic: 70% of traders are betting that prices will fall to $40 before a sustained rebound. The Chaikin Money Flow Indicator is negative-0.17, indicating that money is leaving Solana. The moving averages are all bearish, with the main resistance at $76.79. Forced liquidations are concentrated around $71.50 below and $73.50 to $74.50 above. The market seems to be ignoring the promise of improving token economics and focusing more on the current weakness of the crypto market.

"SOL rebounded, but spot demand was flat. This is a sign of weakness."-- Ted Pillows

Is it reasonable for investors to be so pessimistic? Or is the SGP-0003 proposal grossly underestimated by the crypto community? Even though Solana is inferior to Ethereum in all respects, it still leaves a deep impression on the crypto world. Europe has been conquered, and the rest of the world is likely to follow. This tokenics reform may accelerate the expansion of Solana's network. Its ambitions are global and seem within reach.