NEAR management overwhelmingly approved a proposal to reduce the maximum annual token production rate from 2.5% to 1.6%.
The NEAR Protocol’s governance body, House of Stake, has approved proposal HSP-029, which foresees a significant change in the network’s token economy. The proposal envisages reducing the maximum annual production rate of NEAR tokens from 2.5% to 1.6% over a 24-month transition period.
If the plan is implemented, the production rate will decrease by approximately 3.75 basis points each month, reaching 1.6 percent by the end of the second year. The current distribution model, which allocates 90 percent of newly produced tokens to staking participants and 10 percent to the protocol treasury, will remain unchanged.
The primary goal of the proposal is to reduce the dilution of the NEAR supply and the selling pressure that newly produced tokens might create. The protocol party argues that the need for incentives during the network’s initial phase has largely ended and that the current validator capacity exceeds demand.
Calculations suggest that the change could prevent the production of approximately 11.8 million NEAR in the first two years. Over the six-year period, this amount is expected to reach 66.1 million NEAR, with total supply remaining approximately 4.36 percent lower than current plans. Following full implementation, daily production is estimated to fall from approximately 89,500 NEAR to 57,300 NEAR.
Lower production will also affect staking rewards. If the participation rate remains unchanged, it is estimated that the gross staking yield could decrease from 5.268% to 3.372%.
The decision is not yet binding. It requires review by the House of Stake Security Council, followed by a 90-day waiting period. The final stage will involve validators approving the protocol update. Therefore, the change should be considered a governance decision still undergoing approval, not a finalized network update.
*This is not investment advice.
Continue Reading: Critical Decision That Will Change Supply in NEAR: Annual Production to Drop by 1.6%! Here Are the Details