Solana Proposes Supply Reduction Scheme Amid Governance Vote

Solana is proposing two governance proposals to tighten its token supply and increase network transaction fees. The proposals aim to reduce SOL's inflation rate and increase the amount of tokens destroyed daily, which would have a significant impact on the network's economy.

The first proposal, SIMD-0553, suggests introducing a resource-based transaction fee mechanism that charges fees based on the resources consumed by each transaction. This is expected to increase SOL's daily destruction from around 4,700 USD to 65 million USD, up to 9,000 tokens per day.

The second proposal, SIMD-0550, plans to increase SOL's annual inflation reduction rate by 50%, which would bring the target of 1.5% deflation forward to 2029 from 2032. This is expected to reduce SOL's supply by around 18.9 million tokens over the next six years, valued at approximately 136 million USD.