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Solana’s annualized inflation surges 30.5% after SIMD 96 implementation

Author: Content Editor
Solana’s annualized inflation surges 30.5% after SIMD 96 implementation
The implementation of Solana Improvement Document 96 (SIMD 96) on February 12th caused Solana's SOL token to experience a 30.5% increase in annualized inflation. SIMD 96 adjusted the priority fee structure, allowing validators to receive 100% of the fees collected instead of burning them. This change impacted the real economic value (REV) distributed to token holders. The distribution of network REV shifted, with token holders receiving 46% and validators receiving 51% since the activation of SIMD 96, compared to the previous distribution of 67% and 30% respectively. There are hopes for the approval of SIMD 228, which would introduce a dynamic ratio for SOL's inflation mechanism based on the amount of staked SOL. Some concerns have been raised about priority fee spoofing and the need for validators to share the extra fees with stakers. A newer proposal, SIMD 123, would allow validators to share priority fees directly with stakers, but it is unlikely to be implemented alongside SIMD 96. Stakers will have to rely on validators' willingness to share the rewards until SIMD 123 is activated.

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