- Ilya Polosukhin has put forward a new initiative.
- He proposed creating a NEAR sovereign fund.
- The initiative aims to strengthen the project’s resilience and move from a token-burning model to a more promising approach.
NEAR co-founder Ilya Polosukhin published a proposal on the official forum to create a sovereign fund for the protocol. It is expected to support ecosystem development through targeted funding.
In his post, Polosukhin highlighted the work already done to improve the project’s resilience: reducing inflation, a mechanism that redirects NEAR Intents fees into NEAR buybacks, and the launch of staking for AI inference.
Previously, we took a detailed look at the direction this project is heading:
Polosukhin believes that creating a sovereign fund is the natural next step. As an example, he cited countries such as Singapore and Norway: their sovereign funds use revenues from inherently cyclical sources — oil and land sales — to invest in yield-generating assets, with profits going toward state needs while preserving the fund’s principal.
According to Polosukhin, today most L1 blockchains, including NEAR, pay for network security through inflation — that is, the ongoing issuance of new tokens, which dilutes the share of holders who do not stake.
The sovereign fund is intended to gradually replace this model: instead of paying validators directly from issuance, returns from the fund’s investments would cover security costs and other public goods for the network, while also enabling lower inflation.
Polosukhin also explained why this approach was chosen over simple token burning: burning only offsets inflation for a short time and does not create a sustainable funding source, whereas capital deployed into yield-generating protocols continues to produce income for the ecosystem.
How the Initiative Will be Implemented
It is expected that the sovereign fund will take control of the project’s treasury, as well as the protocol’s future revenue. At the initial stage, its balance will be about 30 million NEAR — at the current exchange rate, that is roughly $50 million.
Next, the fund will buy back NEAR using incoming revenue and deploy the assets into yield-generating protocols. The resulting profits are planned to be directed toward supporting the ecosystem — in particular, a validator support program and payments to MPC providers.
Important nuance: unlike classic sovereign wealth funds, which typically hold liquid fiat assets, the NEAR fund will hold the NEAR token itself — adding extra risk to the model, which Polosukhin expects to offset by diversifying the ways it generates yield.
Over time, the fund’s “principal” will grow through additional allocations — both from protocol revenue and, gradually, from issuance. In theory, this could eventually allow NEAR to move to a fixed token supply model. NEAR holders will also be able to participate in the fund’s yield via the existing delegation mechanism in House of Stake.
This is the first phase of the initiative: Polosukhin stresses that the rollout will be gradual, with checkpoints to verify that the model works before more funds are directed into the fund.
The NEAR co-founder invited ecosystem participants to discuss the initiative over the next two weeks, emphasizing that this is a proposal, not a finished solution — the community will still need to define the fund’s final parameters, including validators and token holders via House of Stake.
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