NEAR governance backs 24-month cut to token issuance

NEAR’s House of Stake approved HSP-029 on Monday, Nov. 2, backing a 24-month cut in the network’s maximum annual token issuance from 2.5% to 1.6%. The proposal would slow the creation of new NEAR, but it still needs further review and validator adoption before the change takes effect, according to the NEAR Forum proposal.

• Current maximum annual issuance: 2.5%
• Target after 24 months: 1.6%
• Estimated issuance avoided in two years: 11.8 million NEAR
• Existing split of new tokens: 90% to stakers, 10% to the treasury

How would the issuance cut work?

The proposal sets a gradual, linear reduction in the issuance ceiling, applied each epoch, or network operating period. It would lower the rate by roughly 0.0375 percentage point per month until it reaches 1.6% at month 24.

That is a change to one protocol parameter. The existing division of newly issued NEAR between staking participants and the protocol treasury stays at 90/10, and the proposal does not introduce a new emissions mechanism, according to the forum post.

HSP-029 estimates that the ramp would avoid about 11.8 million NEAR of issuance over two years and 66.1 million over six years, compared with leaving the 2.5% ceiling in place. Those are estimates in the proposal, not tokens already removed from circulation.

When could the lower ceiling take effect?

The governance vote is one step in the process. NEAR’s proposal says the Security Council must review the result, then a 90-day grace period begins after ratification. Validators must also adopt a protocol upgrade before the new ceiling becomes binding.

The Block reported that the vote passed Monday with overwhelming support and described the same remaining steps: council review, the grace period and validator adoption. Until those steps are complete, the current issuance ceiling remains in place.

The vote therefore approves a plan, but does not immediately change the amount of NEAR the network issues. If the upgrade is adopted and the schedule begins, the rate will step down over two years rather than falling to 1.6% at once.

What changes for stakers and other holders?

Lower issuance means fewer new tokens are distributed over time. The proposal says its modeled supply would be 4.36% smaller after six years than under the current ceiling. That is a projection based on the proposal’s assumptions.

The trade-off is lower projected staking rewards. The Block reported that gross staking yield is expected to decline from 5.268% to 3.372% by the end of the ramp, assuming the staking participation rate measured in September remains unchanged. Staking yield is the return paid to participants who help secure the network by staking their tokens.

The proposal’s author argues that reducing issuance would slow dilution for holders who do not stake, while lowering the reward for those who do. The vote sets that trade-off in motion as a governance decision; its effect on token prices or future participation is not established by the vote itself.

Sources and documents

• the NEAR Forum proposal — gov.near.org