On March 5th, according to Cointelegraph, asset management company VanEck stated that Solana's planned protocol upgrade is crucial for the long-term healthy development of the network, but may have a negative impact on validators' income. In March, Solana validators will vote on two blockchain protocol upgrade proposals (SIMD) aimed at ensuring that stakers receive rewards and adjusting SOL's inflation rate.
Matthew Sigel, head of digital asset research at VanEck, stated in a post yesterday that these two proposals have sparked "significant controversy" as they could potentially cut validators' income by up to 95%, endangering small operators. Although these changes may reduce staking rewards, we believe that reducing inflation is a worthwhile goal to enhance Solana's long-term sustainability
The first proposal SIMD 0123 will introduce an intra protocol mechanism to allocate Solana's priority fees to validators and pledgers. Traders can pay additional fees to speed up transaction processing, with priority fees accounting for 40% of network revenue, but currently validators do not need to share with stakers. The proposal will be voted on March 6th and will increase staking rewards, block off chain trading protocols, and strengthen on chain execution.
The second proposal SIMD 0228 is the "most influential" proposal, which will adjust the SOL inflation rate to be inversely proportional to the percentage of pledged token supply, potentially reducing dilution and lowering selling pressure on stakers. According to Coin Metrics, as of February, Solana's inflation rate was 4%, lower than the initial 8%, but still far above the terminal target of 1.5%, and is currently declining at a rate of 15% per year.
