Solana’s planned protocol upgrades are important for long-term network health but can deal with a blow to validators’ profits, according to Asset Manager Vaneck.
In March, Solana validators will vote for two suggested upgrades – known as Solana Improvement Documents (SIMDs) – in the blockchain protocol designed to ensure rewards for stakers and adjust inflation rates for native Sol (Sol) token.
Both measures have generated “significant controversy” because they stand in the slash validator income of almost 95%, who potentially not cover smaller operators, Vaneck Digital Asset Research head Matthew Sigel Says In a 4 x post post.
“While these changes can reduce staking rewards, we believe inflation is a worthy goal that boosts Solana’s long-term maintenance,” Sigel said.
Sol’s staked supply has increased since 2023. Source: Coin
Related: Solana’s Jito Staking pool exceeds $ 100m on monthly tips: Kairos Research
Reward to stakers
The first, SIMD 0123, “will introduce an in-protecol mechanism to distribute Solana’s priority fees to validator stakers,” Sigel said. Entrepreneurs can pay too much to validators to process the transactions more immediately.
Sigel said the priority fees account for 40% of network revenues, but validators are currently not required to share fees with stakers. Validators are required to pass other forms of income, such as voting rewards.
The proposal, which was for a vote on March 6, not only enhances staking rewards but “also encourages off-chain trade agreements between entrepreneurs and validators, reinforcing on-chain implementation,” Sigel said.
Staking involves blocking the sol as collateral with a validator on the Solana blockchain network. Stakers earn Sol payouts from network fees and other rewards but the risk of “slashing” – or loss of sol collateral – if the validator goes wrong.
Solana network revenues from fees and tips. Source: Multicoin capital
Organizing Inflation
The second, Simd 0228, is the “most affecting proposal to be considered,” Sigel said.
It regulates the rate of SOL inflation to reverse the percentage of staked supply tokens, potential “reduction of dilution and decrease in sale pressure from stakers treating staking rewards as income,” he said.
Until February, Solana’s inflation rate stands 4%, down from an initial 8%rate but higher than the target terminal inflation of 1.5%, According to In a report of coin metrics shared with cointelegraph. Inflation is currently refusing at a fixed rate of 15% annually.
The second proposal is that -DRAFT especially by Vishal Kankani of Multicoin Capital, According to In the chaincatcher. The multicoin, a venture capital firm, owns a “meaningful position” in Jito, the most popular pool of Solana, this Says in a March report.
Until December, Upwards of 93% of Solana Validator uses Jito’s software To maximize revenues from block-building, according to developer Jito Labs.
Proposals come as Asset managers encourage regulators To allow funds that have been exchanged by the Sol Exchange (ETF) to be listed in the US exchanges. Those who gave us US regulators also ask to allow cryptocurrency staking at ETFs to enhance returns.
Bloomberg Intelligence set Sol ETF’s odds were approved in 2025 around 70%.
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