On Sunday, Solana validators began voting on three proposals, two of which involve reducing the amount of $SOL in circulation. The voting will last until Thursday, until approximately 15:30 UTC.
The outcome of the vote depends on the amount of locked $SOL used to secure the network. This gives voting power to validators, the operators managing Solana computers, and regular holders who have delegated their coins to a validator for staking on their behalf.
Three new proposals are being considered on the Solana validators' governance page. Source: Solana.
Two of the three proposals concern supply. SGP-0002 accelerates the pace at which the generation of new $SOL on the Solana network ceases. Currently, the network reduces the amount of $SOL created by 15% annually; this change would double that rate to 30%, allowing the minimum level to be reached faster.
SGP-0003 changes the transaction fee structure and fund distribution. The fee will be split into two parts. A fixed portion goes to the block producer, and a separate portion, the size of which depends on the computational work required for the transaction, is permanently burned.
Earlier this month, it was reported that this change would increase the daily burn from approximately 650 to 7,500-9,000 $SOL, which at Monday's price would amount to about $61,000 and $846,000 respectively.
Fewer $SOL being created and more being destroyed is why holders are paying attention, although neither proposal addresses the demand side.
The final proposal, SGP-0001, does not affect supply but ratifies a document the network calls the Solana Constitution, defining decision-making procedures and launching the software that manages these votes. Changes to Solana have so far been coordinated informally among developers and the largest operators.
All three votes are being held simultaneously, creating a strange situation. SGP-0001 is the proposal that formally establishes Solana's voting system; however, the two supply proposals are now being voted on using that same system—and the results will be tallied before it's known whether the rules governing the vote count have been ratified.
At the start of Monday, $SOL was trading above $96, up 1.6% over the past 24 hours and 28% over the past week.
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