SOL coin is the native token of the Solana blockchain platform and has attracted much attention recently. Many investors and users have questions about the destruction mechanism and supply changes of SOL coins. Here, PHP editor Yuzi will answer these questions for everyone. First of all, SOL coins do have a burning mechanism. Whenever a transaction occurs, a portion of the transaction fee will be burned, thereby reducing the supply. This mechanism helps maintain the stability and value of SOL coins. However, it is important to note that the total supply of SOL coins is fixed and will not decrease over time. Therefore, it can be said that the number of SOL coins will not become smaller and smaller. Instead, the supply of SOL coins will remain stable over time.
SOL coins have a destruction mechanism, which Solana implements through unlimited token supply. To maintain year-on-year inflation, Solana will burn 50% of the SOL from each transaction fee.
In Solana’s economic model, 50% of transaction fees are awarded to transaction validators, while the remaining 50% is used to burn SOL tokens. Anyone who holds a sufficient amount of SOL tokens can become a network validator or a validator delegator and provide support for the Solana blockchain’s consensus process. Users who support the Solana blockchain by staking SOL can receive corresponding rewards. This mechanism effectively incentivizes participants in the community while also ensuring the security and reliability of the network.
The destruction mechanism of virtual currency is usually implemented through smart contracts. In transactions, rules can be set, such as destroying a certain percentage for each transaction. This ensures that the virtual currency supply gradually decreases, increasing scarcity and value.
Commonly burned values mainly include burning, handling fees, repurchase, lock-up and protocol 5. The following is a detailed analysis:
1. Burn:
Burning is a way to permanently remove coins from circulation by sending them to an address that can no longer be accessed. This mechanism is used to reduce the total supply and increase the scarcity of the token.
2. Handling fee destruction:
On some blockchain networks, a certain amount of handling fee is required to process transactions. These fees are sometimes burned, i.e. removed from circulation, rather than captured by miners or nodes. This mechanism helps control the currency supply and improves the overall security of the network.
3. Repurchase and destruction:
Some projects may regularly repurchase their own tokens and destroy them. Doing so can create a pressure in the market as teams demonstrate their ability to buy and burn tokens, thereby increasing the token's value.
4. Lock-up and destruction:
Tokens may be locked in a non-transferable address so that they can never be circulated again. This locking mechanism is usually to meet some specific conditions, such as completing a certain task or reaching a certain time.
5. Protocol design:
Some cryptocurrency protocols are designed with the destruction of tokens in mind. For example, some tokens may have a built-in deflation mechanism that gradually reduces the number of tokens with each round of trading.
SOL coins will not become less and less. There is an unlimited supply of SOL coins. Based on SOL’s economic model, Solana uses a delegated proof of equity consensus algorithm to motivate Token holders to verify transactions. All fees will be used SOL is paid and destroyed.
Currently, Solana’s TPS is 2373, and the average transaction fee is US$0.00025. Compared with Ethereum’s 14.8TPS and US$1.66 Gas, Solana is still ahead in terms of cost performance. Amid the boom in inscription trading, Solana's transaction fees have not increased much compared to before. However, the transaction fees of public chains such as Bitcoin, Ethereum, and Avalanche have increased during this period, which was once "daunting."
Solana’s performance is obvious to all, and its Firedancer upgrade next year promises to increase the capacity of the Solana network by another 10 times. The upgraded Solana network throughput can reach nearly 1,000 times that of Ethereum 2.0.
Solana is a blockchain-based cryptocurrency whose main goal is to provide a high-performance and low-cost decentralized application (DApp) development platform. Now SOL currency has certain technical advantages and innovation , but if there is not enough support from users and application scenarios, its value will be difficult to stabilize. The value of a virtual currency depends largely on market demand and acceptance.
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