Introduction
SIMD-123 is an approved Solana protocol change that turns priority fee sharing from an off-chain promise into an onchain, protocol-enforced payment.
Solana validators may share priority fee revenue with their delegators automatically, in-protocol, at the end of each epoch. Previously, it was not possible to audit that sharing, with risks it didn’t happen or inconsistently since it was often manually done off-chain. SIMD-123 introduces a standard, onchain mechanism with a dedicated commission rate. The split between validator and delegator is defined in protocol state, and applied equally for all delegators.
Background: SIMD-0096 “Reward full priority fee to validators”
To understand SIMD-123, it helps to understand SIMD-0096, as both SIMDs were always intended to work and launch together. The first step: SIMD-0096 mandated that priority fees are fully rewarded to validators”. SIMD-123 creates an onchain method to do it.
A Solana validator earns revenue from several sources when it produces a slot. These include:
- The base fee, a fixed per-signature transaction fee of 5000 lamports.
- Maximal Extractable Value, or MEV. MEV is captured from how transactions are ordered within a slot.
- Priority fees, or additional fees a user/account pays to have their transactions included sooner.
Historically, priority fees were split 50/50: half were paid to the validator and half were permanently burned. SIMD-0096 “reward full priority fee to validators” changed this. After SIMD-0096, 100% of priority fees went to the slot-producing validator, and no longer burned 50% of priority fees. The base fee is still split 50/50 between the validator and a burn. SIMD-96 passed with roughly 77% support and has since been activated on mainnet. Its stated goal was to align validator incentives with network security and to reduce the incentive for private side deals between block producers and transaction submitters.
SIMD-0096 created a side effect for delegators. Priority fees now flow entirely to the validators, and Solana had no in-protocol method to pass a share of that revenue back to the delegators to that validator. Inflation rewards (the newly issued SOL that validators earn for producing blocks) and MEV already had an onchain commission and distribution system. Priority fees did not.
Figure 1. Solana staking reward streams and how each is split
| Reward stream | Commission applied | Where it goes |
|---|---|---|
| Inflation rewards
(newly issued SOL) |
Inflation commission (existing) | Validator keeps the commission; delegators receive the remainder |
| Priority fees
(100% to validator after SIMD-0096) ← largest new shared stream |
Priority fee commission (NEW: SIMD-123) | Validator keeps the commission; delegators receive the remainder at epoch end, proportional to stake |
| MEV
(transaction ordering value) |
Jito Tip Router or other MEV infrastructure distribution
(existing) |
Validator keeps the commission; delegators receive the remainder at epoch end |
| Base fee
(validator share; 50% burned) |
Onchain commission (existing) | Validator keeps the commission; delegators receive the remainder at epoch end |
Priority fees, reward stream changes now covered by SIMD-123’s priority fee commission, are highlighted.
What SIMD-123 actually does
SIMD-123, “Priority fee distribution,” adds an in-protocol mechanism for distributing priority fee revenue to delegators. It covers the validator’s share of the base fee and priority fees.
The mechanism mirrors commissions structure Solana already uses for inflation rewards. It works like this: Each validator sets a priority fee commission rate on its vote account (the onchain account that records the validator’s voting and configuration). For each slot, the validator’s block revenue is split according to that commission rate. Once an epoch ends, the protocol automatically distributes the delegator portion to the validator’s active delegated stake accounts, in proportion to each account’s stake.
Three details matter for how Solana delegators read a validator’s terms:
- The priority fee commission is separate from the inflation commission. A validator can charge one rate on inflation rewards and a different rate on priority fees. When delegators evaluate a validator, delegators now have two commission numbers to consider, not one.
- Commission is expressed in basis points and is capped at 10,000 basis points, which equals 100%. A basis point is one hundredth of a percent, so 500 basis points is 5%.
- The active commission rate is taken from the vote account state as it stood at the beginning of the previous epoch. This lookback means a validator cannot change its commission mid-cycle and apply it retroactively to revenue that has already accrued.
Figure 2. How SIMD-123 pays delegators, per epoch
| 1. Produce blocks
Validator collects block revenue this epoch: priority fees, MEV, base-fee share |
2. Read commission
Priority fee commission is read from vote-account state at the start of the previous epoch |
3. Split each block
Revenue is split by the commission rate (0 to 100%, set in basis points) |
4. Distribute at epoch end
Protocol distributes the delegator portion to active stake accounts, proportional to stake |
Where Alpenglow fits
SIMD-123 arrives alongside Alpenglow in Q3-Q4, 2026. See Figment’s overview on Alpenglow. Alpenglow is a rewrite of Solana’s consensus. Alpenglow replaces two long-standing components, Proof-of-History (a cryptographic clock) and TowerBFT (the Byzantine Fault Tolerant voting mechanism), with two new ones:
- Votor, handles voting and finality.
- Rotor, handles block propagation.
The headline effect is much faster finality, targeting roughly 150 milliseconds versus the multi-second (12s) finality Solana has today. Alpenglow ran on a community test cluster starting in May 2026 and is expected to reach mainnet in late 2026, following the Agave 4.2 client release, with the timeline subject to audits and testing.
Alpenglow and SIMD-123 are separate proposals, and neither depends on the other. The reason to view them together, is that both reshape validator economics and both push in the same direction. The goal: clearer, faster, more transparent mechanics for how the network runs, how rewards are earned and how rewards are distributed. As Solana’s consensus and fee systems modernize, having reward sharing defined in protocol rather than negotiated off-chain fits the same pattern.
What it means for Solana Delegators
SIMD-123 gives all delegators access to a reward type previously only accessible through bespoke arrangements with validators. Priority fee rewards from validators, now reach delegators as an onchain, in-protocol reward. This should raise the Staking Reward Rate (SRR) for Solana delegators, but depends heavily on network fee activity and each validator’s commission. Real rewards will vary by validator performance and by epoch.
For institutional Solana delegators, the benefit is transparency and comparability. Priority fee rewards earned, can be read, audited, reconciled and compared across validators. That supports diligence, rewards reconciliation, and reporting in a timely and less laborious manner than off-chain arrangements.
Status and open questions
SIMD-123 was approved by stake-weighted community vote in March 2025, with about 74.91% voting yes. As of this writing it is listed as under development, expected to ship with the Agave 4.2 client. Until it is live on mainnet, the exact rollout timing, and how it interacts with existing MEV distribution arrangements that operate outside the core protocol today, remain the main items to watch. When evaluating a validator after activation, look at both commission rates (inflation and priority fee), since they are set independently and either one affects delegators net rewards.
Have questions about how SIMD-123 or Alpenglow will affect your Solana staking strategy?
Figment runs institutional-grade Solana infrastructure across 6 countries and 10+ data center locations. Our team can walk you through what these protocol changes mean for your validator selection and reward reporting. Reach out to our team today.
Sources and further reading
- SIMD-0123: Block Revenue Distribution (pull request and specification) – Solana Improvement Documents, GitHub
- SIMD-0096: Reward collected priority fee in entirety (specification) – Solana Improvement Documents, GitHub
- Solana validators to receive full priority fees as SIMD-0096 gains approval – The Block, https://www.theblock.co/post/296932/solana-validators-to-receive-full-priority-fees-as-simd-0096-proposal-gains-approval
- Alpenglow: A New Consensus for Solana – Anza https://www.anza.xyz/blog/alpenglow-a-new-consensus-for-solana
- Solana Set for Major Overhaul After 98% Votes to Approve Historic Alpenglow Upgrade CoinDesk, September 2, 2025
