Solana validators are close to advancing a governance proposal that would sharply increase the amount of SOL burned each day while reducing the rate at which new tokens enter circulation.
If implemented, the proposal would therefore limit the network token’s inflation rate, thereby limiting supply and, in theory, could lead to an increase in the price of Solana tokens if demand remains steady or increases.
A token burn permanently removes cryptocurrency from circulation by sending it to an unusable wallet address. By pairing larger burns with lower issuance, the proposal would reduce the growth of SOL's circulating supply.
The proposal is in Solana's support phase and must secure backing from validators. As of Tuesday morning, it had support from 63 million SOL, or just over 14.4% of the network's staked supply, leaving about 3 million SOL needed to reach the threshold of 65.16 million SOL before the Aug. 18 deadline.
According to the Solana Validator Governance dashboard, to date, the proposal has 73 supporters, including Helius, Jupiter, Staking Facilities, Drift, OtterSec, and Solana Compass.
big news
the solana deflation & burning proposals will go to an early vote starting tomorrow
if they get at least 15% of stake to signal support, they'll go to a final vote after that
if you're a node or holder that want these on Solana, show support fast
The higher burn rate alone would not make SOL deflationary. Solana currently issues about 60,000 SOL per day. The companion issuance proposal is designed to reduce new supply while the fee changes increase the amount of SOL permanently removed from circulation.
If the proposal reaches the required support threshold, it will advance to the discussion phase before a formal validator vote.
Solana, which trades as SOL, is currently changing hands for around $74 at a $43 billion market capitalization. The native token of the Solana network is up slightly on the day, but still a considerable way off from its all-time high of $293 that it reached over a year ago.
