NEAR governance has approved a proposal to lower the annual cap on new token issuance from 2,5% to 1,6% over two years, with the plan also expected to reduce staking yields.
According to The Block, NEAR Protocol’s House of Stake governance body approved proposal HSP-029 with strong support in a vote on November 2. The proposal aims to slow supply growth, reducing the dilution of existing token holders’ shares and long-term selling pressure.
The change has not yet taken effect. First, the Security Council must review and approve the voting result, after which the transition process and validators’ protocol upgrade must be completed.
About 66 million fewer NEAR over six years
Once implementation begins, the annual issuance cap will be reduced gradually over 24 months. The linear reduction applied during each network epoch will amount to approximately 0,0375 percentage points per month, bringing the cap down to 1,6% at the end of two years.
According to calculations in the proposal, compared with a scenario in which the current 2,5% cap remains in place, approximately 11,8 million fewer NEAR will be issued in the first two years and 66,1 million fewer NEAR over six years. By the end of the sixth year, total supply is projected to be approximately 4,36% lower than under the previous arrangement.
Once fully implemented, the amount of new tokens issued daily is also expected to fall from approximately 89.500 NEAR to 57.300 NEAR. The allocation of newly issued tokens will remain unchanged, with 90% going to staking participants and 10% to the protocol treasury.
Slower supply growth, lower staking yields
Another consequence of the plan for those who stake their tokens could be a lower yield. If the staking participation rate measured in September remains unchanged, the gross staking yield is calculated to fall from approximately 5,27% to 3,37%.
The proposal’s rationale argues that approximately 57% of the supply is not staked and that the current issuance rate transfers value from this group to those who stake. It also notes that demand to join the active validator set exceeds current capacity, emphasizing that the need for incentives during the network’s initial growth period has largely passed.
What steps remain before implementation?
Following approval by the Security Council, a 90-day transition period will begin. Validators will need to adopt the required protocol upgrade for the change to become binding.
NEAR previously lowered its maximum annual token issuance rate from 5% to 2,5% in October 2025; the new proposal aims to lower the cap once again.
Not investment advice.