NEAR Protocol’s House of Stake has approved HSP-029, a governance proposal to reduce the network’s maximum annual token issuance from 2.5% to 1.6% over a 24-month period. The measure is designed to slow supply growth and reduce long-term dilution without changing how newly issued tokens are split.

Under the proposal, the existing distribution remains intact, with 90% of new issuance continuing to go to staking participants and 10% to the protocol treasury. Even after the governance vote, the change is not yet active and must still pass additional review and waiting periods before validators can implement it.

A phased cut to issuance

HSP-029 does not introduce a new emissions model or alter validator reward allocation. Instead, it changes a single protocol parameter by lowering the issuance ceiling in stages across network epochs.

The schedule would reduce the cap by about 3.75 basis points each month until it reaches the 1.6% target. According to estimates included in the proposal, that path would keep roughly 11.8 million NEAR out of circulation during the first two years. Over six years, the cumulative reduction is estimated at 66.1 million NEAR, leaving total supply about 4.36% lower than under the current model.

Impact on staking economics

Because staking rewards are tied to issuance, the proposal is also expected to lower returns for participants once the new rate is fully in place. Based on the network’s September participation figures, the projected gross staking yield would decline from 5.268% to 3.372%.

The plan keeps the reward split unchanged, meaning the adjustment comes from a lower issuance level rather than from a redistribution between stakers and the treasury. Supporters present that approach as a rules-based way to modify token economics without adding new discretionary mechanisms.

Part of a broader governance debate

The vote comes amid wider discussion inside the NEAR ecosystem over how to improve token economics while avoiding systems that rely on active human capital allocation. Earlier ideas involving a treasury-backed fund had drawn criticism from some participants, who argued that validator support and spending decisions should not depend on administrator judgment.

HSP-029 takes a different route by using a pre-defined issuance schedule. As described in the proposal, the mechanism does not require a new administrator, a price oracle, or a separate spending program.

What happens next and market reaction

The proposal still needs a Security Council review, ratification, and then a 90-day waiting period before validators adopt the required upgrade. If those steps are completed, the lower issuance rate would then be introduced gradually over the following 24 months.

While governance moved forward, NEAR token price action remained weak. The asset was down 7% over the previous 24 hours, trading at about $3.84, and the source article said it underperformed most large- and mid-cap altcoins on Tuesday.

Source: cryptopotato.com