by Jonathan Agozie 
Solana has approved proposal SIMD-0096, which aims to increase rewards for the validators.
Solana has approved proposal SIMD-0096, which allocates 100% of priority fees to network validators. This change aims to increase rewards for the validators, who are crucial for the network’s reliability and performance. It marks a shift from the previous model, where fees were evenly split between being burned and rewarding validators.
BREAKING: Voting has concluded for the @solana proposal to allocate 100% of priority fees to validators, with 77% of votes in favor, moving away from the previous 50/50 split between burning and rewarding. This change is now set to take effect. pic.twitter.com/hTMKdA0p1p
— SolanaFloor (@SolanaFloor) May 27, 2024
Priority fees are paid by users who want their transactions processed faster, especially during peak times. Validators prioritize these transactions to ensure the network functions properly. The recent vote concluded with 77% in favor of the proposal, demonstrating strong support from validators.
To implement this proposal, a feature gate is required. While the payment structure for transaction submitters will remain unchanged, the new software will allocate a larger portion of fees to validators compared to previous versions. According to the project’s developer forum, the feature gate is essential to ensure a smooth transition for all validators to the new functionality at the epoch boundary, thereby maintaining consensus.
This feature is available in the Master of Agave repository, starting from version 2.0. It can only be activated on Mainnet Beta after a sufficient quorum of stake has been reached, following the standard feature-enabling rules.
The Community’s View
Previously, 50% of priority fees were burned, which many believed had a deflationary impact on the Solana token (SOL). Under the new model, all priority fees will go to validators, potentially increasing their revenue but also raising concerns about inflation due to more tokens being created.
The decision has sparked mixed reactions within the Solana community. Some members and validators worry about inflationary pressures resulting from the shift from burning fees to fully rewarding validators. Stakewiz, a prominent validator, expressed concerns about Solana token expansion and inflation, predicting a 4.6% increase. He emphasized that SIMD-0096 should be activated gradually and in conjunction with SIMD-0123 to mitigate potential financial impacts.
Conversely, supporters argue that this change will eliminate off-chain side deals, making the fee structure more transparent and fair.
