Solana Validators to Be Rewarded with a Remarkable 100% of Priority Fees Following Recent Governance Proposal

Solana Validators Set to Receive 100% of Priority Fees Following Recent Governance Proposal


Ruholamin Haqshanas
Updated:
May 28, 2024 06:14 EDT
|
2 min read


Solana validators will witness a surge in their rewards as a recent governance proposal has been successfully passed, granting them the entirety of priority fees from transactions conducted on the network.
According to data from the Solana governance system, the proposal received a favorable vote of 77% late on Monday.
Validators play a vital role in blockchain networks by operating software to validate transactions and ensure the security of the network.
What Do Priority Fees Mean in Solana?
In Solana, priority fees refer to additional charges that users can pay to expedite the processing of their transactions.
Under the previous system, half of the fees from priority transactions were eliminated, while the other half was allocated to validators.
However, this setup raised concerns about validators engaging in “side deals” with transaction submitters to receive more SOL tokens, as highlighted by the proposal creator, known as tao-stones, on the Solana governance forum.
By allocating all priority fees to validators, the aim is to incentivize them to prioritize the security and smooth operation of the network.
This change is part of Solana Improvement Document number 96 (SIMD-0096) and has been implemented through a feature called “Reward full priority fee to validators #34731.”
Following the announcement of the successful proposal, the SOL token has seen a 1.6% increase in the past 24 hours, trading at $166 during Asian afternoon hours on Tuesday, as reported by CoinGecko.
Laine, a Solana staking validator, noted that the SIMD-0096 proposal might have a negative impact on the Solana Network by making SOL more inflationary.
“The reality is that the current priority fee mechanism allows for side deals, which create opacity and hinder free, transparent, and fair access to block space for all network participants,” she wrote in a recent post on X.
Despite the annual issuance increase of 4.6%, Laine pointed out that priority fees were absent in May 2023, suggesting that the effective inflation rate would revert to approximately 9.9% annually.
Solana ETFs Could Be the Next to Enter the Market
Brian Kelly, a cryptocurrency investor and trader, has suggested that Solana could potentially be the next cryptocurrency to have a spot exchange-traded fund (ETF) in the United States.
During a recent episode of CNBC’s ‘Fast Money’, Kelly, who is also the founder and CEO of the BKCM Digital Asset Fund, posed the question, “The trade now is, who’s next?”
He then suggested, “You’ve got to think about Solana as probably the next one. Bitcoin, Ethereum, and Solana are probably the three big players for this cycle.”
However, Nate Geraci, the president of The ETF Store, expressed skepticism, stating that a spot Solana ETF might not materialize until a Solana futures product is listed on a major exchange or until Congress establishes a clear regulatory framework for cryptocurrencies beyond Bitcoin and Ethereum.
On May 23, the SEC officially approved 19b-4 applications from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise for issuing spot Ether ETFs.
Follow Us on Google News