Solving Sol Value Accrual

Solana's value accrual problem centers on the fact that staking yield is almost entirely funded by token issuance rather than network activity. Before SIMD 96 activated in February 2025, 50 percent of priority fees were burned and 50 percent went to validators. SIMD 96 removed that burn entirely by routing all priority fees to validators, and without SIMD 123 there is no in-protocol mechanism to share fees with stakers, leaving any such arrangements to third-party deals outside the protocol.

SIMD 553, proposed by KB from Temporal and formalized from the earlier SIMD 547, attempts to restore activity-linked burn by introducing a fee tied to requested compute units rather than priority fees or base fees. The burn parameter has been updated from 0.1 to 0.5 lamports per compute unit requested. At current usage levels Carlos estimates this would burn approximately 7,000 to 9,000 SOL per day, restoring burn levels seen in Q4 2024 and January 2025, and offsetting roughly 12 to 15 percent of daily issuance. The mechanism scales linearly with network usage and capacity, so burn rises as block limits increase or slot times decrease. Current annualized inflation sits around 3.8 percent with a terminal rate of 1.5 percent, and a separate proposal from Heal Use would double the disinflation rate from 15 to 30 percent, reaching terminal inflation in roughly three years instead of six.

Even at peak recent burn of approximately 10,000 SOL per day in Q4 2024, inflation was still running at approximately 5 percent, meaning burn was only partially offsetting new supply. Carlos illustrated the dilution problem by noting SOL reached an all-time high near 260 dollars in January while its market cap was nearly double the 2021 peak. He also noted the ratio of application revenue to REV on Solana has expanded to approximately 5x today from roughly 1x in 2023, meaning applications have captured a disproportionate share of chain-generated value, and that figure understates the disparity because not all REV actually accrues to SOL holders. Ian compared this to an App Store model but acknowledged open-source blockchains cannot easily extract rent from applications because developers can migrate to competing chains.

Brandon Watt from ANSA reviewed SIMD 553 and was broadly supportive but raised two concerns. The 0.5 lamport parameter may be too aggressive for high-frequency traders and market makers, with a suggested starting point of 0.1 or 0.2 lamports. More significantly, SIMD 553 would only be viable after Alpenglow is live, because implementing it beforehand would increase voting costs for validators and disproportionately hurt smaller validators. There is no known timeline for Alpenglow, making the proposal feel theoretical in the near term. Ian called it a step in the right direction but not the cleanest value accrual mechanism possible, while acknowledging that renewed attention to Solana tokenomics is itself a positive development after years of the topic being set aside.

A structural risk Ian raised is that the SOL token may become less central to economic activity even as chain performance improves. Pump.fun, which accounts for over 20 percent of compute unit usage on Solana, is now offering bonding curves denominated in USDC rather than SOL. Ian said he assumes there is a side deal with Circle, which he described as getting aggressive on distribution. Double Zero's Edge product is stablecoin-denominated where its previous product used SOL, and Ian said Jito's new JTX product will likely feature USDC-denominated pairs, meaning fees accrue in stablecoins rather than SOL. Research from Benedict Brady showed traders on Axiom were being charged roughly 100 times the actual Solana transaction fee and continued trading regardless, which Carlos cited as evidence that price-insensitive users exist and that the chain should be capturing that value rather than ceding it to applications and inclusion services.

On Bitcoin, ETFs have seen approximately five consecutive weeks of net outflows totaling over 5 billion dollars, with the main buyers identified as MicroStrategy and leveraged long traders. Bitcoin's realized price sits near 53,000 dollars while spot is around 60,000 dollars, and historically Bitcoin has bottomed around or below realized price, suggesting further drawdown potential. MicroStrategy holds approximately 883,000 BTC, and its original thesis of Bitcoin as a non-sovereign store of value has shifted in market perception to being dependent on its own continued buying. MicroStrategy sold approximately 32 BTC shortly before recording, raising concern about funding STRCH dividend payments, though it subsequently purchased more Bitcoin by selling additional MSTR shares through an ATM vehicle. STRCH has not re-pegged, and if it stays deeply below 100 dollars the dividend yield must rise, increasing funding pressure, with the worst-case outcome being that common shares are sacrificed to protect STRCH holders.

AI models are currently assessed as better at exploiting smart contract vulnerabilities than finding patches, creating an asymmetric offense-defense dynamic in DeFi. The open-source nature of crypto code and large sums locked in contracts make DeFi a particularly attractive target. Wallet infrastructure such as Phantom is identified as a higher-risk attack vector than individual DeFi protocols because it serves as a gateway to many protocols simultaneously. Protocols with strong reputations and no prior exploits are expected to attract disproportionate capital inflows as Lindy effects become more pronounced, while protocols that launched primarily to issue tokens are unlikely to invest in ongoing code hardening.