Solana Burn Could Jump Tenfold Under New Plan

Resource-Based Fees at the Heart of SIMD-553

Solana could be on the verge of a significant shift in how it handles transaction fees and token supply. A governance proposal known as SIMD-553 would replace the network's current flat-fee model with one that prices transactions according to the computational resources they actually consume, with those resource fees burned in full.

Under the existing structure, each transaction on Solana pays a flat fee, half of which is burned outright and half of which goes to the block's validator. SIMD-553 would change that by splitting the fee into two parts: a 2,500-lamport inclusion fee paid to the block leader, and a resource fee equal to 0.5 lamports per requested compute unit, burned at 100%.

The projected impact on daily burns is substantial. Anza, the core protocol development firm, estimates that at recent network activity levels, the change would lift daily burns from around 648 SOL to between 7,500 and 9,000 SOL per day, a 12-to-14-fold increase from the current baseline. For context, at roughly 3,000 TPS the network burns around 648 SOL per day from signature fees, well below daily inflation of roughly 60,000 SOL per day.

SIMD-550 Targets the Inflation Schedule Directly

The companion proposal, SIMD-550, approaches supply reduction from a different angle. It proposes updating Solana's inflation schedule by increasing the disinflation rate from -15% to -30%, doubling the pace of inflation decline, and allowing inflation to reach the long-term terminal rate of 1.5% in 2.8 years (H1 2029) rather than 5.7 years (H1 2032).

Helius modeling indicates the proposal would reduce emissions by 18.9 million SOL, or approximately $1.51 billion, over six years, while gradually reducing nominal staking yields from roughly 5.84% to 4.34%, then 3.00%, and then 2.25% over the first three years.

Both proposals are bundled together, with SIMD-550 cutting issuance while SIMD-553 raises what gets destroyed. Taken together, they target both sides of Solana's net supply equation. Solana's staking ratio sits at approximately 67.93%, nearly double Ethereum's 34.14%, and the proposals are partly designed to redirect capital from staking into productive use within the Solana economy, with the expectation that lower staking rewards push investors toward DeFi and other onchain use cases.

Both SIMDs have advanced to formal Solana Governance Proposals (SGP-0002 and SGP-0003), headed for stake-weighted community votes that require a two-thirds supermajority to pass. It is worth noting that even at the top of the projected range, 9,000 SOL per day in burns is offset by roughly 60,000 SOL in daily inflation, so the fee change alone does not make SOL deflationary. The full supply impact depends on both proposals passing and being implemented together.

Sources:
21Shares: Solana SIMD-550 and SIMD-553 Staking Yield Analysis
CoinDesk: Solana Proposal Would Take Daily SOL Burns from $47,000 to $650,000
Helius: SIMD-550, Why Solana Should Double Disinflation