Solana Co-Founder Clarifies Dynamic Base Fee Proposal

Paigambar Mohan Raj
Source: Bitcoinist

Solana (SOL) co-founder Anatoly Yakovenko has proposed a change in the fee structure of the blockchain. The new mechanism is dubbed “dynamic base fee.”

As per the proposal,

“Network doesn’t have a mechanism to target a healthy load, resulting in two potential performance degradation attack vectors. At 100% heterogeneous hardware doesn’t have uniform performance resulting in general performance degradation with downstream effects on block producers. Without a dynamic base fee, a faulty majority can stuff blocks with 100% load making verification for non-validating nodes unnecessarily expensive.”

The proposed solution stated, “allow the base fee to be dynamically modified based on average load with a target of 50% full blocks.”

The plan underlined a dynamic base price based on the Solana (SOL) network‘s load. Each computing unit needed by the transaction would incur a fee on the blockchain. Yakovenko proposes that the transaction fee be higher during periods of low network activity and lower during periods of high network activity. The base price is raised by 12.5% if the average load over the previous eight blocks is more than 50% and vice versa. Moreover, there is no maximum fee, while the minimum cost is retained.

Many compared the change to that of the Ethereum (ETH) network. However, the Solana (SOL) co-founder was quick to respond that the dynamic fee was a part of SOL even before ETH.

What about Solana’s burns?

Users initially believed the SOL burning mechanism should manifest due to the proposed burning rule. According to Yakovenko, 50% of the fees received in SOL are already liable for burning. However to some extent, changing the cost structure would alter the total quantity of SOL burned.

Additionally, SOL was one of the most affected projects in the FTX collapse. SOL fell from $38 on November 5th to $12.9 on November 10th. More than $700 million exited from Solana-based applications as a result of the FTX collapse. FTX founder Sam Bankman-Fried was one of the biggest supporters of the SOL network.

At press time, Solana (SOL) was trading at $13.99, up by 0.1% in the last 24 hours. Moreover, the currency is 94.6% down from its all-time high of $259.96, attained on November 6th, 2021.