Starting tomorrow, validators will vote on the Solana network upgrade. The outcome will likely affect the price as Q1 concludes.
These Solana Improvement Documents (SIMDs) will improve the network’s technical and economic aspects. Nevertheless, this upgrade could bring trade-offs that sway validator economics and market sentiment. With SOL price currently floating in the $140 range, these changes could shape the trajectory as quarter 1 closes. Meanwhile, discover why layer 2 Solana could be the best crypto to buy today.
Inflation Slasher: Solana Validators to Upgrade Solana Network
A key upgrade, SIMD 0228, will adjust Solana’s inflation rate dynamically based on staking participation. The current 4% inflation, down from 8% initially, will be targeted at a 1.5% terminal rate with the upgrades.
This proposal is projected to cut inflation by up to 80%, tightening its supply. Reducing issuance will likely boost prices in this demand-driven market.
🚨NEW: Solana’s SIMD-0228 proposal, which may reduce inflation by 80%, has been amended following community feedback, extending the new curve rollout to 50 epochs instead of 10. The vote is still set to go live in approximately 3 days. pic.twitter.com/ygW4EAbpco
— SolanaFloor (@SolanaFloor) March 4, 2025
Moreover, Solana’s rise over the past year shows its sensitivity to network upgrades. A successful upgrade will push SOL even higher than its current ATH of $293, assuming institutional flows keep going at today’s rate.
Yet, Solana validator’s economics pose a challenge. The upgrades might slash Solana’s revenue by 95%, with mandatory voting fees of $58,000 yearly and $6,000 in hardware costs. Subsequently, only 458 of 1,323 validators are profitable now. Smaller operators could exit, which would then lead to greater centralization. Therefore, lower staking rewards can also prompt selling, adding downward pressure.
Solana's upcoming protocol upgrades could bolster network strength but may reduce validator earnings by up to 95%, raising concerns in the crypto community, according to VanEck. Key votes on the proposed changes are scheduled for March 6. $SOL
— CryptoEdge (@EdGeraldX) March 4, 2025
Nonetheless, the proposed US Strategic Crypto Reserve, including Solana and potential spot SOL ETF, will bump institutional interest, driving its price. But, centralization fears might cap gains if validator exits dominate headlines.
VanEck’s $520 year-end target suggests a Q1 range of $200-$250 is feasible if upgrades land well. A 10-20% Solana post-upgrade bump seems plausible with positive sentiment, aligning with the projection to hit 22% by 2025.
The upgrades also spotlight the need for a Solana Layer 2. Rising transaction volumes, especially from meme coin surges, is straining its rigid design. A Layer 2 could ease congestion, cut costs, and boost throughput, mirroring Ethereum’s success.
For Q1, the focus is on the upgrades’ immediate effects, likely tilting SOL toward a higher close if execution succeeds. With successful execution, layer 2 will be the next player in the SOL ecosystem. This is a future necessity to maintain Solana’s edge.
Future Necessity: Solana Layer 2 to Battle Congestion
With Solana network upgrades set to shape SOL’s price as Q1 ends, Solaxy emerges as Solana’s first Layer-2 solution, addressing scalability needs akin to Ethereum’s. As Solana’s ecosystem grows with DeFi and meme coins, Solaxy’s role becomes vital, easing network strain and upgrading throughput.
Solaxy’s token, $SOLX, is priced at $0.00165 after raising over $25 million since December 2024. Staking $SOLX offers a 164% APY, benefiting presalers by giving more to early birds.
Solaxy’s Token Launchpad Expansion will partner with other platforms to enable token launches on its chain. This taps into Solana’s $11.8 billion meme coin sector, offering a scalable alternative for developers. With pump.fun’s $3.3 billion volume, Solaxy’s launchpad strengthens SOL ecosystem position.
Additionally, Solaxy is developing a bridge for seamless cross-chain transfers between Solana, Ethereum, Base, and its chain. This interoperability targets DeFi growth, linking Solana’s performance with Ethereum’s liquidity. These updates, alongside infrastructure benchmarks, bolster Solaxy’s utility as Solana scales.
As Solana eyes a $500 target by 2026, Solaxy’s $24 million raise and sub $0.002 price hint at a 50-100x rally, as per Borch Crypto analysis. He calls it the crypto to buy.
The SOL upgrades’ success, paired with Solaxy’s scaling solution, positions both assets for potential upside. SOL and $SOLX could see synchronized growth, driven by network strength and Layer-2 innovation.
For the latest updates on the project, connect with the SOLX community on X and Telegram
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Key Takeaways
- Solana validators to upgrade Solana network, Q1 pump?
- Is Solana Layer 2 the best crypto to buy?
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