Solana Passes Proposal to Allocate All Priority Transaction Fees to Validators

On the evening of May 27, Solana approved proposal SIMD-0096, allocating all priority transaction fees (Priority Fee) to Validators.

Solana Passes Proposal to Allocate All Priority Transaction Fees to Validators

Specifically, in Epoch 620, the voting process for proposal SIMD-0096 concluded. The total number of coins participating in the vote was 51.1%. The required approval rate was 66.66%. The data shows that 77.7% of the voting units agreed with the proposal, thus officially passing it.

Voting results for SIMD-0096 proposal.

The SIMD-0096 proposal will allocate all priority transaction fees (Priority Fee) to Validators. To have their transactions processed with priority in the network, users will need to pay an additional fee to the Validators, known as the Priority Fee. Previously, 50% of this fee was given to Validators, and the remaining 50% was burned (removed from circulation) by the network. However, it is important to note that 50% of the original transaction fee (Base Fee) will still be burned after this proposal.

Allocating the entire Priority Fee to Validators will create more incentives for entities to participate in operating the network, thereby decentralizing fees and reducing the risk of a 51% attack. This is crucial as Solana is known for its high hardware and monthly operating cost requirements for Validators. Consequently, many Node operators, especially smaller entities, face significant challenges in breaking even while participating in network validation.

In addition to the changes in fee structure, Solana is actively working on changes related to how it receives and processes user requests. In April 2024, a series of spam actions from trading bots caused issues for the Solana network. Since then, Solana has been testing new client versions (specifically 1.18) to temporarily mitigate these issues.

Read more: Will the 1.18 update solve the bot spam problem on Solana?

Regarding proposal SIMD-0096, even though it was approved, there has been ongoing debate within the community about whether this change benefits Validators, who were the only group eligible to vote on this proposal. As a result, some Validator groups chose to vote "Abstain" - a neutral vote for this proposal.

Key Highlights:

• Proposal Approval: SIMD-0096 was passed with 77.7% approval, allocating all Priority Fees to Validators.
• Priority Fee Structure: Users pay an additional Priority Fee for transaction priority, all of which now goes to Validators.
• Incentive for Validators: Increased incentives for participating in network operations, reducing the risk of a 51% attack.
• Hardware and Cost Challenges: Addresses high hardware and operating costs for Validators on the Solana network.
• Ongoing Network Improvements: Solana is testing new client versions to mitigate spam issues caused by trading bots.
• Community Debate: Discussions continue about the fairness of the proposal, with some Validators choosing to abstain from voting.

This development marks a significant step for Solana in enhancing network security and incentivizing Validators, albeit with some controversy regarding the voting process and its implications for the wider community.