The Solana network currently faces a disparity between its token burning and minting practices. On average, Solana burns about 648 SOL each day while minting roughly 60,000 SOL. This significant imbalance has prompted a new proposal, SIMD-0547, introduced by a developer associated with the Temporal project. The aim is to create a more balanced approach to SOL supply dynamics by implementing a resource-based fee system that would ensure all transaction fees collected are completely burnt.
The proposal was made public on May 30 and quickly garnered support from prominent figures within the Solana ecosystem, including the co-founder and teams from both Helius and the Solana Foundation.
#What does SIMD-0547 propose for Solana?
The primary function of SIMD-0547 is quite simple. It plans to impose a fixed fee of 0.1 lamport for every cost unit on transactions processed by the Solana network. The collected lamports will not be redistributed to validators or held in a treasury; instead, they will undergo immediate and total burning.
Current estimates indicate that with the adoption of this mechanism, the daily burn rate of SOL could soar to between 1,500 and 1,800 SOL per day. This projection represents an increase of approximately 2.3 to 2.8 times the current burn rate. However, even with this increase, the amount burned remains a small fraction of the roughly 60,000 SOL that is minted daily through inflation, signaling an incremental change rather than an immediate one.
#Who supports this proposal and its implications?
The backing of the proposal from notable figures like Anatoly Yakovenko is significant, as is the support from Helius, a key infrastructure team. Active discussions are ongoing within the Solana Improvement Documents GitHub repository, where developers and stakeholders are weighing in on potential adjustments to the implementation, including possible changes to the fixed lamport fee.
Importantly, SIMD-0547 is contingent on the completion of the Alpenglow consensus upgrade. This means that while the proposal has received interest and support, there is currently no set timeline for its activation.
#What does this mean for SOL holders and the broader market?
At present, the Solana network’s daily burn rate of 648 SOL represents barely 1% of the daily inflation of 60,000 SOL, raising concerns about the sustainability of the token’s value over time. Should the proposed burn rates of 1,500 to 1,800 SOL be achieved, this would translate to roughly 2.5% to 3% of the daily inflation being mitigated, marking a considerable improvement from the current situation.
The proposed fee system is structured to remain low enough that transaction costs for users on Solana will not be significantly impacted, resulting in a mechanism intended to deliver benefits at scale rather than on a per-transaction basis. The Alpenglow upgrade presents a delay, suggesting that the proposal, despite backing, may still not see implementation for some time.