Solana network upgrades could cut validator earnings

Vaneck’s digital asset research manager Matthew Sigel warned that the upcoming up to the Solana network could have a significant impact on the benefits of the validators while increasing the risks of centralization.

Sigel described three major proposals – SIMD 096, SIMD 0123 and SIMD 0228 – in a post on X on March 4. These proposals seek to improve Solana (GROUND) Economic framework but has the potential to reduce validator’s revenues up to 95%.

The SIMD 096 of Solana, implemented on February 12, reoriented 100% of the priority costs to the validators, eliminating the previous system which burned half of these costs. Payments of clearing have increased accordingly, but negotiation agreements outside the chain between validators and merchants were dissuaded.

SIMD 0123, which is currently to be voted, would divert more income from node operators by forcing validators to pay priority for stakers.

SIMD 0228, the most controversial proposal scheduled for a vote on March 6, would modify the inflation rate of Solana according to the participation of the parties. Network network inflation The rate would decrease by 4.7% to 0.93% if the implementation levels remained 63%. This would reduce the dilution of the tokens but would also reduce the rewards of stimulation, to the great drawback of the validators.

Validators are mainly questioned about the high operating costs necessary to execute the nodes. These include compulsory voting costs of 1.1 soil each day (about $ 58,000 per year) and material expenses of around $ 6,000 per year. Since only 458 of the 1,323 Solana validators have a sufficient amount of participation to transform a profitSmall operators may be forced.

The drop in voting costs was proposed by several members of the community to reduce financial pressure. Despite the controversy, Sigel argued that the reduction in inflation would benefit to the long -term soil by lowering the sale pressure and supporting the value of the token.

The activity of the Solana network remains strong. With $ 109 billion in February, the blockchain exceeded Ethereum for the fifth consecutive month, demonstrating its domination in the decentralized exchange volume, according to Defilma data.

The current plans could however make the exploitation of an impossible node to small validators, which could lead to centralization even more.