Solana Stakeholders Debate SOL Issuance and Burn Rates
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Solana stakeholders are deciding whether to update its issuance schedule and fee mechanisms as votes on Solana Governance Proposals (SGP) 0002 and 0003 approach their conclusion (the formal vote closes at ~11:15 am EST Friday).
SGP-0002 would revamp Solana’s issuance schedule by doubling the annual disinflation rate to 30%, reducing projected issuance by ~18.9 million SOL over the next six years and reaching Solana’s terminal inflation rate of 1.5% in roughly three years instead of six. SGP-0003 would update Solana’s fee mechanisms. Rather than pay a set 5,000 lamports (1 billion lamports equals 1 SOL) per-signature base fee, the proposal splits the fee into a 2,500 lamport base inclusion fee and a resource fee that scales with the amount of cost units the transaction consumes (essentially the complexity and computational overhead of the transaction). Projections estimate daily SOL burn could rise from ~648 SOL to upwards of ~7,500 if the plan is implemented.
Both proposals are being considered under Solana’s new governance framework (itself up for a formal vote under SGP-0001) that introduces a “Solana Constitution” and a mechanism for validators and stakers to shape the network’s trajectory by proposing SGPs. Quorum requires one-third of network stake with greater than two-thirds voting in favor to pass. Solana’s SIMD governance framework, primarily used by its core developer shops to implement technical updates, will remain in place.
At the time of publication (8/28/26 at 9 am), SGP-0002 and SGP-0003 have met quorum but do not have a sufficient FOR majority to pass.
Our take
As we discussed on a recent episode of Galaxy Grid, the business of blockchains is evolving. Activity and speculation alone are not enough to justify the native token appreciating in price. Investors are demanding better economics and tangible value accrual that link onchain activity to the token. SGP-0002 and SGP-0003 show what that looks like at the underlying token issuance and consumption level by reducing overall supply and increasing burn.
Both proposals initially looked like they would be approved with an overwhelming amount of FOR votes early on. The latest tallies, however, demonstrate there is still no clear consensus across the ecosystem. Whether or not they ultimately pass, the general direction of both proposals is correct. Solana’s issuance and fee mechanisms were designed at a time when future demand was highly uncertain. As we have argued repeatedly, at that time issuance was a bootstrapping mechanism for the network. Solana’s long-term viability depends on an onchain economy where demand for blockspace drives fees and validator income. Solana’s initial fee design differentiated the chain by creating an incredibly cheap platform to transact on but was conceived at a time when many assumed value would accrue at the network level rather than the application level.
Neither proposal is perfect, and their implementation would come with tradeoffs. One of the biggest areas of pushback has been that they create uncertainty over whether issuance and fee parameters might change again. If issuance and fee schedules can change through a vote, how can validators and businesses plan? While SOL inflation is the not the be-all and end-all for validator sustainability, prematurely reducing rewards could make running a validator on SOL unattractive if it does not lead to material appreciation in SOL’s price or if fees do not pick up to compensate for the loss (see our Solana Q2 report for an overview of validator economics). For businesses that service their customers by paying for blockspace, an adjustment in fee policy could dramatically impact their operations, requiring major updates to their code (although if that requires them to improve the efficiency of their transactions, that should be a net benefit over the longer term) and reducing margins.
Too much certainty is an impediment to Solana’s growth. Blockchains need built-in flexibility to ensure they can adapt to shifting technical and economic environments.
Too much certainty, however, is an impediment to Solana’s growth. There needs to be built-in flexibility to ensure these chains can adapt to shifting technical and economic environments. While protocol ossification is a necessary characteristic of a store of value like Bitcoin, it is not necessary for an ecosystem that aims to host the world’s economy and must adapt to an ever-changing external environment.
Any change will always have tradeoffs, creating winners and losers. The key is to ensure a governance system that enables all stakeholders to have a voice in shaping the chain’s trajectory and ultimately results in more winners than losers.
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