Key Highlights
- Solana co-founder Anatoly Yakovenko signaled support for a proposal to increase SOL burns through resource-based fees.
- The mechanism could raise daily SOL burns from 648 SOL to as much as 64,800 SOL.
- The proposal seeks to improve SOL tokenomics without disrupting market makers or network decentralization.
Anatoly Yakovenko, co-founder of Solana, has expressed support for a newly proposed measure (SIMD-547) that would burn large amounts of SOL to improve the token’s economics without jeopardizing Solana’s low-cost transactions.
The proposal, published by user @cavemanloverboy, introduces a resource-based base fee that would be fully burned. According to the author, Solana’s current token-burning mechanism has almost no impact on the reduction of the token supply, despite the network processing millions of transactions every day.
Presently, Solana burns only about 648 SOL each day through its current system of base fees. The proposal states that the amount is extremely small compared to the economic benefit realized from non-vote transactions in the network, thereby rendering SOL a poor asset to gain exposure to the network.
Yakovenko’s repost of the proposal on X attracted attention from the Solana community, as it suggests interest from the project’s leadership in improving the network’s tokenomics.
Proposal includes resource-based fee burn
Under the proposed system, the burn rate for transactions will amount to 0.1 lamport per cost unit of a requested transaction in the suggested solution. This would create a more resource-driven fee-burning mechanism tied directly to network usage.
According to the proposal, a base fee increase across the board is not viable. As a rule, retail users pay more priority fees as opposed to base transaction fees. However, validators and market makers place large orders, which rely heavily on low base fees. Increasing the base fee could affect operating costs and even decentralization and efficiency in the market.
Instead, the resource-based method aims to address transactions that have a higher network resource utilization without negatively impacting the market-making.
Burn rate could increase by up to 100x
The proposal estimates that the number of cost units processed per block on the Solana blockchain is between 50 million and 300 million. If the proposed fee structure were implemented, daily SOL burns could increase roughly 100-fold, from 648 SOL to between 10,800 and 64,800 SOL.
The author notes a more accurate estimation of daily burned SOL tokens would be around 21,600 SOL, which is a significant rise in burned tokens but stays below the Solana inflation rate of about 60,000 SOL.
Recent development of the Solana Foundation
The Solana Foundation, AirAsia MOVE, and the crypto exchange from Kazakhstan, Intebix, have agreed on the LOI to examine the possibility of adding KZTE (Evo), a stablecoin pegged to the currency of Kazakhstan, on the Solana network.
According to the official announcement, the partnership aims to evaluate the prospects of integrating the KZTE stablecoin in the framework of AirAsia MOVE for the natives of Kazakhstan.
Debate emerges within the community
The proposal comes at a time when blockchain networks are looking for methods of balancing the issuance of tokens while implementing supply reduction processes. Just like the fee-burning process used by Ethereum with EIP-1559, this proposal seeks to create a correlation between burning tokens and their usage on the network.
There has not been any governance vote yet regarding the implementation of this proposal, but Yakovenko’s backing has brought it into the spotlight. It has also ignited some discussion in the community on how to improve the tokenomics of the Solana network without compromising on its fast transactions.
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