Solana fees hit record as validators double pace of inflation cuts

Solana's fee generation, denominated in SOL, reached a seven-day average of nearly 9,200 SOL on Thursday, Aug. 27, over 80% higher than three months ago. Non-vote transactions also set a record high of 191 million on a seven-day basis, compared to just 88 million a year earlier.

Jito validator tips averaged 2,073 SOL per day over the past week, up 26% week over week, a direct indication of increased onchain activity.

Meanwhile, SGP-0002, the Double Disinflation proposal, passed on Friday with just over 67% support against a 66.67% threshold to pass. Turnout reached 60.7% across 1,326 validators, the highest onchain governance participation in Solana's history. The proposal doubles the annual disinflation rate from 15% to 30%, removing roughly 18.9 million SOL from projected issuance over six years.

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In simple terms, this means that less new supply of Solana (SOL) will reach the market every year, which also means validators will earn less for the same amount of work. Staking rewards will fall from ~5.25% to 2.25% by year three, which squeezes validators who lean on inflation income rather than transaction fees, meaning many validators will likely become unprofitable within the next three years.

Though this will likely impact smaller independent operators rather than the largest operators, the average user will likely notice nothing from the passing of this proposal in terms of the speed and fees of the Solana network.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.