Solana validators are nearing the threshold needed to advance a governance proposal that would significantly increase the amount of SOL burned each day while simultaneously reducing the rate at which new tokens enter circulation.

The proposal comes as major Layer 1 blockchains have increasingly adopted supply-tightening mechanisms. Ethereum's EIP-1559 upgrade, implemented in August 2021, introduced a base-fee burn that established a widely cited precedent for using transaction fee destruction to offset token issuance on a large network.

Proposal SGP-0003, currently in Solana's support phase, combines two previously introduced Solana Improvement Documents into a single governance package designed to tighten SOL's circulating supply. The first component, SIMD-0553, would introduce resource-based transaction fees, increasing daily SOL burns from approximately 650 SOL (roughly $48,000) to between 7,500 and 9,000 SOL (up to about $668,000), depending on network activity. The second, SIMD-0550, would double Solana's annual disinflation rate to 30%, advancing the network's 1.5% inflation floor from 2032 to 2029.

A token burn permanently removes cryptocurrency from circulation by sending it to an unusable wallet address. By pairing larger burns with lower token issuance, the proposal aims to reduce the growth rate of SOL's circulating supply.

As of Tuesday morning, the proposal had garnered support from 63 million SOL, representing just over 14.4% of the network's staked supply. It requires approximately 3 million additional SOL to reach the 65.16 million SOL threshold before the August 18 deadline. According to the Solana Validator Governance dashboard, the proposal currently has 73 supporters, including Helius, Jupiter, Staking Facilities, Drift, OtterSec, and Solana Compass. Helius is a leading Solana infrastructure provider, while Jupiter is one of the network's most heavily used decentralized exchanges, giving the backing of both operators particular weight within the ecosystem.

Prominent community members have been rallying support ahead of the deadline. Mert, a well-known voice in the Solana ecosystem, posted the following on X:

big news the solana deflation & burning proposals will go to an early vote starting tomorrow if they get at least 15% of stake to signal support, they'll go to a final vote after that if you're a node or holder that want these on Solana, show support fast no time to waste — mert (@mert) August 2, 2026

The higher burn rate alone would not render SOL deflationary. Solana currently issues approximately 60,000 SOL per day. The companion issuance proposal under SIMD-0550 is specifically designed to reduce new supply, while the fee changes under SIMD-0553 would increase the volume of SOL permanently removed from circulation.

If the proposal reaches the required support threshold, it will advance to the discussion phase before proceeding to a formal validator vote. A successful vote would then determine whether the two SIMD components are implemented on-chain.

Solana, which trades under the ticker SOL, is currently priced at approximately $74 with a market capitalization of $43 billion. The native token of the Solana network is up slightly on the day but remains well below its all-time high of $293, reached over a year ago.

Traders on Myriad, a prediction market developed by Decrypt's parent company Dastan, remain bearish on the token, placing 70% odds that SOL will drop to $40 before recovering to $160.