Solana Company will support Solana’s proposed constitution but oppose two economic proposals affecting token issuance and transaction fees. The Nasdaq-listed validator announced its position on Aug. 21. On-chain voting on the first three governance proposals is expected to start on Aug. 22.
The firm trades on Nasdaq under the HSDT ticker. It will vote for SGP-0001, known as the Solana Constitution, and reject SGP-0002 and SGP-0003. Management said the objections concern timing, not the measures’ goals.
Why Is Solana Company Supporting SGP-0001?
SGP-0001 will allow a weighted voting process in which SOL token holders can invalidate any votes placed through validators handling their delegated tokens.
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According to the company, this arrangement allows financial institutions to have a part in governance without having to cede their voting power to validator operators. Solana Company operates validator infrastructure for institutional firms within the Asia-Pacific region.
As said by Joseph Chee, chairman and CEO of the company, predictability is vital when institutional firms decide to adopt any platform. The company indicated that changing both the issuance and fees during the first voting period might hamper their forecasting in the future.
SGP-0002 backs SIMD-0550, which will raise the yearly disinflation rate to 30%, up from 15%. The terminal inflation rate remains at 1.5%.
According to the proposal, it will take two and a half years, while the present process will take five and a half years. Moreover, it will result in approximately 18.9 million fewer SOL emitted within six years.
Solana Company noted that it has no objections against reducing issuance. In addition, institutional investors can include staking yield in their revenues or operating income. Therefore, the schedule change will influence their models.
This factor becomes important for the firm’s own finances because staking provided the $2.512 million out of the total $2.526 million second-quarter revenue. Besides, it mined and automatically restaked 31,200 SOL.
Operating expenses and losses from sales of digital assets resulted in the $30.3 million quarterly net loss. Solana Company noted that it will review a faster disinflation rate if SOL sees a continuous net capital inflow.
Solana Company Opposes SGP-0003 Over Fee Uncertainty
SGP-0003 supports SIMD-0553, under which a resource fee and an inclusion fee will be applied. All of the resource fees will be burned off. Fees will thus become proportional to the capacity of the network used by the transactions.
According to Galaxy Research, the daily burn rates will increase from 650 SOL per day to 7,500 to 9,000. The author of the proposal later stated that previous projections were “misleading” and issued a range based on the previous month.
The management confirmed that a fixed fee does not take into account the resources spent. However, it argued that variable fees will be unpredictable in terms of budgeting for institutions. The company may consider another proposal with a fee floor calculable in advance.
Each proposal requires at least 66.67% approval from the decisive stake. The calculation takes into account votes either way but disregards abstaining. The approval will set the policy but will not activate any code.
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