Solana’s fee overhaul increases burn and makes resource hogs pay

If the proposal is adopted, developers who reduce resource use could lower costs for end users and make their apps more attractive. Developers who consume more of Solana’s computing capacity would have to pay their fair share.

Solana Improvement Document (SIMD-0553). Source: Solana Foundation GitHub

Cavey says the proposal is particularly aimed at computationally wasteful arbitrage, where searchers can submit huge numbers of transactions that mostly fail, while paying very little.

In the past 30 days, he says, five of the traders with the highest failure rates submitted 11.5 million transactions, consuming 929 million compute units across 2,477 trades that generated $16,091 in profit, while paying just 78 SOL in fees.

A resource fee would push arbitrage searchers toward more informed and reactive strategies.

Stablecoin and token transfers could become roughly 20% cheaper, Cavey says. Temporal’s modeling also finds that vote transactions would cost around 12.3% less and oracle updates 16.9% less under the proposed model.

The trade-off?

Some trading activity would become considerably more expensive.

Temporal estimates that a high-priority swap routed through DFlow would cost 9.72% more under the proposed terminal fee rate, while a mid-priority OKX swap would cost 301% more and a pump.fun swap with zero priority would cost 3150% more.

That means some of the network’s heaviest users could see their transaction costs balloon, particularly traders using bots that submit large numbers of transactions.

Don’t worry though, as the fee increase is off a low base. Cavey argues that even the most compute-intensive transactions would cost around $0.05 under the proposed model, compared with the $2 to $5 fees a user might pay to swap $100 on a centralized exchange.

Who pays more, who pays less. Source: Temporal.xyz

The current proposal rejects a uniform increase to Solana’s existing 5,000-lamport fee, arguing that it would disproportionately hurt high-volume senders such as market makers while still failing to properly price resource usage.

Other costs to consider

“There have been a few people that have raised concerns about the parameters, but overall, everyone’s been very supportive,” Cavey says, citing validator income, higher costs for high-frequency users and increased complexity among the core issues.

One contributor, mschneider, asks why fees should be based on the resources a transaction requests rather than what it actually uses. “Units used seems more natural,” he says.

Cavey says there’s a reason the fee is based on the resources a transaction requests, rather than what it actually uses: it lets users know the cost upfront and allows validators to check they can afford it before processing the transaction. But it also means users can pay for resources they don’t end up using, giving developers an incentive to estimate their needs accurately.

Validators could initially see a small reduction in base-fee revenue by around 4%. While Cavey says the parameter can be adjusted to offset that impact if needed, some contributors like bji remain unconvinced and believe validator income should take precedence over the additional burn.

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The proposal also raises questions about complexity, with some contributors questioning whether the new fee model could make Solana harder to use. Cavey rejects the concern, saying most users will not have to calculate fees themselves because applications and exchanges generally handle it. Automated traders are already “sophisticated” enough to adapt to changes in Solana’s fee structure, he says.

What about the SOL burn?

SIMD-0553 would increase the amount of SOL burned by transaction fees, reducing more of the token from circulation rather than paying it to validators.

According to the proposal, the current daily burn of around 648 SOL could rise to roughly 7,500 to 9,000 SOL at the proposed terminal fee rate, representing a roughly 12 to 14-fold increase if current resource demand remains unchanged.

SIMD-0553 would increase the amount of SOL burned by transaction fees. Source: Temporal.xyz

Cavey says the higher burn could eventually push SOL into deflationary territory:

“If Solana wins, there’s a chance that Solana could actually become a deflationary currency.”

Burning the resource fee also reduces incentives for validators to include unnecessarily resource-intensive transactions.

Solana currently issues roughly 60,000 SOL a day, so even a 9,000-SOL daily burn would not by itself make the token deflationary (although a separate proposal called SIMD-0550 would curb inflation faster than currently scheduled). Network activity would need to grow substantially before the burn outweighed new issuance. Cavey says that would be “a nice secondary effect” rather than the main objective.

“The primary goal is to align core devs, developers, and app developers to make Solana faster. That is objective number one, and that is enough of a reason for this proposal, in my opinion.”

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