NEAR Governance Approves Plan to Reduce Annual Token Issuance Cap to 1.6%

NEAR’s House of Stake approved a plan on Nov. 2 to reduce maximum annual token issuance from 2.5% to 1.6% over 24 months. The change would slow supply growth, but the vote does not immediately alter network issuance.

The difference between the starting and target rates is 0.9 percentage points, equivalent to a 36% reduction in the ceiling. The adjustment would take place gradually following the required approvals and upgrade.

Issuance Would Decline Gradually

HSP-029, authored by SVRN’s Sal Ternullo, passed its governance vote. It preserves the existing allocation of newly issued tokens: 90% for staking participants and 10% for the protocol treasury.

The proposed schedule includes a roughly 90-day grace period after ratification, followed by reductions each epoch, a recurring network operating interval. The annual issuance ceiling would reach 1.6% after the 24-month adjustment, limiting future token creation without removing existing tokens from circulation.

Lower Dilution Comes With Lower Rewards

For holders who do not stake, slower issuance would reduce the rate at which newly created tokens dilute their share of total supply. Stakers would receive fewer new tokens under otherwise unchanged conditions.

The proposal models gross annual staking yield falling from approximately 5.27% to 3.37%, assuming staking participation remains at its September measurement of 42.71% of supply. These are modeled yields, rather than guaranteed returns; changes in participation would alter how rewards are divided.

The proposal also acknowledges pressure on validator revenue. Its monitoring plan calls for quarterly records on issuance, staking participation and validator-set health.

Validators Must Separately Adopt the Upgrade

After a successful vote, the Security Council has 14 days to review the proposal and may veto or suspend it. Proposals that are not vetoed then go to the Foundation’s directors for an execution decision.

Changing the issuance parameter also requires validators to adopt a protocol upgrade. HSP-029 explicitly states that House of Stake cannot bind validator operators through its vote alone.

The NEAR Protocol Working Group would implement, test and release the upgrade, while NEAR One would coordinate readiness and publish the activation schedule. Wallets, exchanges, custodians and staking providers would have the grace period to update their disclosures before reductions begin.