đŸ”„ Draft: reduce NEAR inflation 5%→3.25% over 9 months

House of Stake Governance
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:collision: As a member of Near Legion, I propose reducing NEAR’s maximum inflation from 5% to 3.25% over a 9-month transition, with an annual governance review thereafter.

Current issuance pressure stands at roughly 171k NEAR per day (~62.5M per year at a circulating supply of ~1.25B), which risks significant dilution over the coming years.:melting_face:

Similar adjustments are already being implemented by leading L1 networks — Ethereum (post-Merge low/negative issuance), Solana (gradual annual reductions), and Cosmos (ATOM) (dynamic and recently lowered inflation).:globe_with_meridians:

In addition, Polkadot (DOT) has already held a governance vote and is actively working on implementing lower inflation parameters, showing that this shift is becoming an industry-wide standard.

This reform aims to ease sell pressure, enhance long-term tokenomics sustainability, and strengthen NEAR’s DeFi and ecosystem growth.:backhand_index_pointing_down:

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Full text attached :backhand_index_pointing_down:

:bookmark_tabs: Cutting NEAR Inflation by 35% — Growth for Holders, Security for Validators

Summary

Proposal: Reduce NEAR inflation from 5% → 3.25% over 9 months, while preserving validator security and improving token dynamics. The plan includes a clear timeline, an annual review, and transitional support for validators.

Rationale

  1. Gradual Reduction Timeline (9 months)
  • Voting . . .
  • Month 0: 5% → 4% (Comes into force upon reaching the required percentage of votes)
  • Month 4: 4% → 3.25%
  • Month 9: community vote to confirm or adjust
  1. Network security

Even with inflation reduced to 3.25%, staking rewards remain competitive under realistic staking-participation assumptions . This helps ensure validator revenue stays viable and network security is preserved.

  1. DeFi incentives

By slightly lowering staking rewards, NEAR holders may turn to DeFi options — lending, borrowing, or liquidity pools — boosting real activity on the network.

  1. Annual voting mechanism

Inflation parameters will be reviewed annually by community vote, using core on-chain metrics such as staking participation, TVL, and validator distribution. The community can also consider other signs — like price swings or external data — when deciding on inflation.

  1. Market alignment (competitor comparison)
  • Ethereum: issuance dropped sharply after the Merge; net supply-change has often been near zero or negative depending on burn activity.
  • Solana: started with higher inflation and reduced over time toward lower steady rates.
  • For NEAR, this 9-month plan aims to reduce inflation without disrupting validators or the market.

Inflation Impact

Assumptions for emission numbers: calculations use a circulating supply of ~1.25B NEAR (snapshot date: 10.09-2025).
Formula: Emissions = supply × inflation_rate.

Effective inflation decreases from ~5% → 3.25% within nine months.
Staking APR (illustrative): 9.00% → 7.20% → 5.85% (assumes ~55.56% staked).

This two-stage adjustment allows validators to adapt while structural sell pressure on the token is reduced.

Assumptions & Formulas

APR formula (illustrative):
APR ≈ inflation_rate / staking_share
Example: inflation = 5%, staking_share = 55.56% → APR ≈ 9.0%

Emission and Price Pressure

Based on the supply assumption above:

  • 5% inflation → ≈171,233 NEAR/day (~62.5M NEAR/year, ~5.21M/month)
  • 4% inflation → ≈136,986 NEAR/day (~50.0M NEAR/year, ~4.17M/month)
  • 3.25% inflation → ≈111,202 NEAR/day (~40.63M NEAR/year, ~3.39M/month)

Overall: ~35% fewer tokens emitted daily (5% → 3.25%), materially reducing structural sell pressure.

Yield Dynamics

Validator APR decreases as inflation falls, but DeFi opportunities and potential token value growth can help keep overall yield competitive.

This shows how different income sources work together — it’s illustrative, not a forecast.

Why Validators Still Win

Base rewards in NEAR decrease, but total returns can remain competitive when accounting for:

  • realistic price scenarios,
  • additional protocol or ecosystem incentives (short-term transitional support), and
  • DeFi income opportunities.

Example (illustrative): 1,000,000 NEAR staked

  • At 5% inflation (APR ≈ 9% with ~55.56% staked): 90,000 NEAR/year
  • At 4% inflation (APR ≈ 7.2%): 72,000 NEAR/year
  • At 3.25% inflation (APR ≈ 5.85%): 58,500 NEAR/year

Note: USD outcomes depend on price. Appreciation affects USD returns, not NEAR quantities. contains detailed scenarios combining price trajectories and DeFi participation.

This demonstrates that validators can maintain positive returns while shifting from inflation-based rewards toward ecosystem-driven income.

Call to Action

We invite validators, builders, and major holders to publicly support this proposal — sign the governance thread and share endorsements. Early, visible support from respected validators helps the community reach consensus faster and with greater confidence.

This proposal strengthens NEAR’s economy, follows recent L1 trends, and preserves network security.

By working together, validators, builders, and holders can help NEAR grow steadily and sustainably.

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Interesting proposal. Thanks for sharing.

Would it make sense to smoothen the reduction even further? (ie. a 25bp drop every month)

I feel that would be better vs sudden drops of 100 / 75bps (even if these are well communicated to all stakeholders).

I’d caution to refer to this being proposed by “NEAR Legion” (afaik this is not NEAR Legion’s official stance) :folded_hands: Many of us are part of the Legion; perhaps saying you’re a member of it would be more appropriate.

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If you also can, please share the contents of your images as text in the OP in case people want to quote or reference it in the comments :+1:

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How does this impact the annual Inflation driven annuity due to the House of Stake?

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First of all, this proposal doesn’t represent NEAR Legion, it would be like me making my own proposal and saying it’s proposed by NEAR community at large.

Appreciate the thought behind this, but I think we’re still misdiagnosing the problem.

A gradual cut to 3.25% over 9 months might feel more palatable than the old 2.5% proposal — but functionally, it’s the same medicine in a different bottle. If the underlying issue is weak token performance or insufficient economic sustainability, cutting emissions doesn’t address that. It just lowers the cost of capital
 without a plan to deploy that capital better.

Let’s be clear: NEAR’s problem is not runaway inflation. It’s insufficient token sinks, low demand-side pressure, and still-nascent organic usage. Emissions tweaks don’t fix those — they just reduce staking yield, which disincentivizes the most aligned participants (i.e. long-term stakers) without offering them an alternative. That’s not alignment; that’s attrition.

We should be asking: what is the capital currently being paid out to stakers actually doing? If the answer is “nothing,” that’s not a staking problem — that’s an ecosystem strategy problem. Reducing emissions doesn’t reallocate those funds; it just vanishes them.

Unless there’s a clear plan to:

  • Redirect value to builders or users,

  • Grow organic usage (ConsumerFi, real DeFi sinks, native memes),

  • Or at least pair the emission cut with a compelling yield-bearing alternative



then we’re just pulling a lever because it’s there, not because it moves us forward.

Let’s fix the fundamentals — not just the optics.

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yes, i support this . æˆ‘æ”ŻæŒèż™äžȘææĄˆïŒŒæŻćčŽćąžćŠ çš„Near ć€Ș怚äș†ïŒŒèż™äžȘć»șèźźćŸˆć„œă€‚

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You’re right that inflation alone isn’t the core issue — but cutting it isn’t just “cosmetics” either.

  1. The bigger we grow, the heavier the self-inflicted pressure. Around 171k NEAR hits the market daily as rewards. As the ecosystem scales, that constant flow only grows in weight. Lowering emissions eases that drag immediately.

  2. A signal of discipline and maturity. Investors, especially institutions, read monetary policy as intent. A clear, community-backed reduction shows NEAR is serious about long-term sustainability.

  3. Laying the foundation for demand. Emission cuts don’t replace token sinks —

  4. DeFi, ConsumerFi, fees, new services — but they prepare the ground so that when those engines kick in, their impact translates directly into stronger price dynamics.

  5. Staking remains attractive. Even at 3.25%, staking yield stays around 5–6% — competitive with other L1s and far above traditional markets. Validators still have sustainable income while the system becomes healthier overall.

This isn’t the cure-all — but it’s part of a real plan. Reducing emissions cuts today’s pressure, builds confidence in tomorrow, and ensures that future growth compounds into lasting value for the entire community.

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I agree with reducing inflation because waiting for transaction volume and fees to grow naturally is too slow; NEAR could be crushed by inflation before that happens.

I also agree that we need a complementary plan to redirect the significant funds saved from this reduced inflation. This money should be used for things that can accelerate the growth of the entire NEAR ecosystem.

Specifically, how do you think these substantial funds could be used? I’d like to hear your thoughts.

—
Let me share a few ideas first.

:one: We could redirect the “reduced inflation rewards” to boost the earnings for HoS (House of Stakes) participants. We can introduce a diminishing function for governance participation rewards. This means users would not only need to stake NEAR for the long term but also consistently participate in decentralized governance (or ensure their delegates are active). Otherwise, their HoS earnings would gradually decrease over time, eventually falling to the level of standard staking rewards.

This approach could significantly speed up the adoption of HoS. While staking on nodes is straightforward, governance is more complex, naturally leading to fewer participants. As a result, active governors would earn higher rewards than before, attracting individuals who are genuinely committed and active for the long run.

:saluting_face: The main goal of this idea is to solve the problem of low participation and engagement in on-chain decentralized governance.

:two:Use rewards for various DeFi projects. Instead of giving them directly to the project teams, we can “boost the rewards” for their users. For example, we could increase the “USDC Net Liquidity Reward APY” on RHEA or offer more substantial prizes for “Trade Competitions.”

Many have pointed out that the high staking rewards on NEAR indirectly reduce participation in DeFi. At the same time, we face the issue of low fees, meaning the amount of NEAR burned is far less than the amount created through inflation, and we urgently need to increase on-chain transaction volume.

So, why not use the “reduced inflation rewards” to encourage activities that actively “burn fees”? This means rewarding active DeFi participants.

:saluting_face: This idea aims to solve three key issues: increasing DeFi participation, accelerating fee burning, and attracting more capital from other L1s to NEAR.

—
I don’t know anything about programming, but I often have creative ideas about governance and welcome any discussion.

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I appreciate the thinking behind this proposal — it’s measured, thoughtful, and clearly comes from a good place. But I still believe this emissions taper, even softened to 3.25% over 9 months, is fundamentally misdiagnosing the real issue.

NEAR doesn’t have an emissions problem. It has a utility problem.

Cutting emissions sounds responsible — but if you pull a lever that isn’t connected to anything, nothing moves. Right now, that’s what this feels like: we’re reaching for the easiest lever because it’s visible — not because it’s effective.

âž»

  1. “171k NEAR hits the market daily — lowering emissions eases the drag.”
    Emissions only hurt when there’s no offsetting demand. That’s the real issue here.

Ethereum and Solana don’t succeed because of emissions policy — they succeed because they have token sinks.
‱ ETH has gas burns, L2 settlements, MEV absorption.
‱ SOL has NFTs, DePIN, meme tokens, and DeFi volume — everyday activities that consume SOL.

NEAR doesn’t yet have those mechanics at scale. Until it does, reducing emissions doesn’t change the equation. You’re just shrinking the supply side without growing the demand side. The faucet gets smaller, but the bucket’s still leaking.

âž»

  1. “It signals maturity to investors.”
    Signals matter — but only if they lead somewhere.
    A lower emissions number on a dashboard doesn’t attract capital unless it’s tied to a strategy.

What are we doing with the saved emissions? Where is that capital being redirected?
If there’s no reinvestment into DeFi incentives, ecosystem growth, or protocol-owned liquidity, then we’re not signaling maturity — we’re signaling contraction.

âž»

  1. “It lays the foundation for future growth.”
    That’s backwards. You don’t plant seeds by pulling fertilizer.

Token sinks and usage have to exist first — otherwise, you’re pulling the lever again
 and nothing’s connected. Emission cuts don’t create demand. They just limit how much you’re giving to your most aligned participants — stakers.

âž»

  1. “Staking is still competitive.”
    Compared to TradFi? Sure.
    But crypto capital doesn’t benchmark against 10-year bonds. It benchmarks against what’s hot.

If NEAR staking drops while other chains offer competitive yield plus utility, capital will migrate. This is a competitive landscape — and yield still matters.

âž»

  1. “It’s part of a bigger plan.”
    Then let’s see the rest of the plan.

Emissions cuts are only meaningful if paired with:
‱ Sticky token sinks (defi, memes, fees, usage-based staking)
‱ Builder incentives and protocol reinvestment

Otherwise, we’re just tightening the belt without feeding the body.

âž»

Bottom line:
This proposal is thoughtful — but the lever isn’t attached to anything.
NEAR doesn’t need cosmetic tightening. It needs demand-side mechanics. Token velocity. Real usage. Organic burn. Utility-driven holding behavior.

Until we have those, emission cuts just take capital out of the system without putting it to work. And that’s not sustainable — that’s shrinkage with cosmetic branding.

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Best Job, I hope a voting mechanism can be implemented soon.

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I want to raise a point that you may not be considering: part of the reason some are so keen to reduce emissions is because you can think of it as being the “risk-free rate” of the protocol. Because NEAR locked in native staking cannot be used for DeFi, and because DeFi cannot provide a competitive risk-free rate, most NEAR will logically choose to participate in native staking, leaving less interest from parties holding NEAR in NEAR DeFi.

You can make the argument- and it’s a reasonable one- that reducing emissions still won’t drive native DeFi demand, and that that capital will then flee to other chains, but on the other hand any large holder seeking to unload NEAR to reposition to other chains would tank the NEAR price. This isn’t in the interest of the large holder who might have a strongly collateralized position in NEAR terms given current exchange rates, so from this perspective it’s not unreasonable to say “emissions rate down → DeFi demand up” in directly consequential terms.

Personally speaking I think we need more active participation in our DeFi ecosystem by NEAR holders, and whether or not we increase the burn spend of active NEAR I still think emissions reduction serves this purpose.

just my 2c

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Every single day, at ~5% annual inflation, about 171,000 NEAR enters circulation — roughly $1.71M/day and ~$624.15M/year at $10/NEAR.
Meanwhile, only ~$100M is staked in comparison; new supply significantly outpaces what we lock up. That’s the real faucet flooding the system.

This isn’t theoretical. Strong networks pair real demand with supply control:

  • Ethereum combined on-chain usage growth with a structural reform (EIP-1559) that materially slowed net supply growth.
  • Solana absorbs supply through sustained on-chain activity — NFTs, DePIN, DeFi volume, memecoins and transaction fees.
  • Polkadot directs a material portion of emissions into its treasury, converting inflation into ecosystem investment.

If NEAR waits passively for utility to “magically” appear, the token risks prolonged price pressure long before demand arrives — and capital will migrate to chains that both use their token and manage supply. We can’t rely on hope while the market punishes the token.

The playbook is two-step and immediate:

  1. Slow the leak — near-term emissions rebalancing and/or routing a portion of emissions off direct market issuance.

  2. Attach the lever — immediately redeploy the saved emissions into measurable demand mechanics: liquidity & market-making, builder grants and protocol-owned liquidity, and incentive programs that create real token sinks (fee burns, settlement sinks, usage-linked staking rewards).

This is not austerity for optics. It’s runway creation: reduce supply pressure so redirected capital can buy traction, fund builders, and create organic sinks that sustain price discovery.

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The value of the token keeps going down right now. It’s like saying you’re not going to do anything. Ruduce near inflation is one of the most effective ways to raise prices.

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Don’t just keep saying no and post some other solutions and materials you’re talking about. Don’t just think it’s going to be like that. What you’re saying is anyone can say easliy. Tell me what that’s based on and what data and analysis you’re thinking about.

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This sounds like a fair plan. Re-direct it towards an alternative mechanism to lock in tokens and provide above market APY.

Could be a good strategic move. Incentives and rewards must continue for lockers to stay locked after 12 months.

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The natural choice here is the HoS. It will be given to HoS stakers and HoS restakers, which is pragmatic and logical.

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You see the TVL has been declining and funds are being drained recently because you’re not doing anything, right? Reflect on yourself. As you said, the people who go out with the reduced compensation rate are the ones who don’t trust the Near Protocol.And near-protocol staff who continue to take no action should also reflect.

When a crisis comes, doing nothing is the biggest crisis. lt’s like just stand still and face ruin

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You are absolutely right, I share your point of view. If they leave, let them leave, but the project is worse off with these same people. Don’t worry, soon I will submit a new updated proposal, one that is better than this proposal, and it will address not only the rate reduction but much more. This will be much better for the project, since the tokenomics have not been updated since 2020. The market has changed drastically. Measures need to be taken, as this will open new paths for development.”

1 Like