HSP-003: veNEAR Holder Rewards Program

House of Stake Proposals
1

In collaboration, Meta Pool, Linear, Hot, and Gauntlet are sharing two draft proposals—HSP002 and HSP003—for open discussion. This post serves as a Request for Comment (RFC) to gather insights and feedback from validators, token holders, and the broader community. No voting will take place at this stage. The aim is to collect constructive input and refine the proposals before submitting them to the House of Stake for formal consideration.

Active community participation is essential to ensure these proposals align with the principles of decentralization and contribute to a resilient, transparent, and healthy ecosystem. Your perspectives help shape decisions that strengthen the long-term sustainability of the network.

Frontmatter

hsp: 003
title: veNEAR Holder Rewards Program
description: Establish competitive yield incentives for veNEAR holders to drive governance participation
author: Gauntlet, MetaPool, LiNEAR, HOT
status: Draft
type: Decision
category: Economic Governance
created: 2025-10-10
requires: HSP-002

Abstract

This proposal establishes an initial 3-month rewards program for veNEAR holders to incentivize governance participation in the House of Stake. The program implements a dynamic yield structure targeting competitive APY rates between 4.2% (leveraged staking) and 4.5% (post-reduction direct staking), with a budget of 280,682 NEAR to achieve our goal of migrating 60M NEAR to House of Stake. This proposal depends on HSP-002 (Validator Support Program) being implemented. Continuation of rewards beyond 90 days will require a subsequent proposal.

Situation

NEAR token holders face competing yield opportunities through leveraged staking (4.2% APY) and liquid staking tokens (LSTs) in DeFi protocols. With a future reduction in inflation from 5% to 2.5%, effective direct staking APY will decrease from approximately 9% to 4.5% (assuming 50% of supply remains staked). Without competitive incentives for veNEAR, adoption of the House of Stake governance system may lag, hampering NEAR’s ability to fund grants, protocol improvements, and community initiatives through collective decision-making.

The context of this proposal is fundamentally shaped by the NEAR Tokenomics Enhancement Package (HSP-002). A future reduction in NEAR’s inflation creates a new opportunity: the lowering of baseline staking yields to 4.5% makes it economically feasible to offer veNEAR rewards that are competitive without being excessive. HSP-002’s validator support program ensures network decentralization is maintained even as validator rewards are reduced by approximately 50%. Together, these create the conditions for a sustainable veNEAR incentive program.

Early momentum is critical when launching a new governance system in a mature ecosystem. Slow adoption could create challenges for new strategic initiatives including NEAR Intents, NEAR AI, and application growth. If House of Stake fails to attract sufficient participation in its first months, it risks becoming irrelevant before realizing its potential to enable effective, stake-weighted governance for the NEAR ecosystem.

Mission

Objectives:

  • Migrate 60M NEAR to House of Stake within the first 3 months of launch
  • Achieve competitive yield for veNEAR holders between leveraged staking APY (4.2%) and any future reduction in direct staking APY (to ~4.5%)
  • Catalyze network effects by spiking momentum at launch
  • Enable robust governance participation to fund ecosystem development
  • Maintain financial discipline by optimizing reward expenditure relative to governance engagement
  • Establish baseline metrics and learnings to inform future incentive proposals

Outcomes (3-Month Period):

  • Month 1: 10M NEAR migrated to House of Stake
  • Month 2: 30M NEAR migrated
  • Month 3: 60M NEAR migrated (10% of staked NEAR)
  • Reward efficiency ratio of 100-180+ NEAR gained per NEAR spent
  • Comprehensive program evaluation to guide future proposals

Note: This proposal covers only the initial 90-day period. Any continuation or modification of the rewards program beyond this period will require a new proposal based on the outcomes and learnings from this pilot phase.

Approach

3-Month Pilot Reward Structure

This proposal implements a phased reward structure for the initial 90-day pilot period only. Based on learnings from this pilot, a subsequent proposal will be required to continue or modify the incentive program.

Month 1: Launch Incentive

  • Fixed 7.5% APY on first 10M NEAR deposited
  • Estimated monthly rewards: 62,500 NEAR
  • Rationale: Strong launch incentive to drive initial adoption

Month 2: Dynamic Scaling

  • Target supply: 30M NEAR
  • APY calculated as: Rewards_APY = 198 / √(NEAR_supply) = 3.6%
  • Estimated rewards: 90,374 NEAR

Month 3: Continuation of Dynamic Scaling

  • Target supply: 60M NEAR
  • APY: 2.6% (using dynamic formula)
  • Estimated rewards: 127,808 NEAR

The dynamic formula is derived from research on comparable staking ecosystems and ensures rewards remain competitive with on-chain yield opportunities while preventing excessive dilution as adoption scales.

Future Phases (For Reference Only)

The sections below outline potential future phases to provide context for long-term planning. However, these phases are NOT included in this proposal and will require separate governance approval.

Potential Phase 3 (Months 4-6):

  • Month 4 (90M supply): 2.1% APY, ~156,533 NEAR
  • Month 5 (120M supply): 1.8% APY, ~180,748 NEAR
  • Month 6 (150M supply): 1.6% APY, ~202,083 NEAR

Potential Phase 4 (Months 7-9):

  • Month 7 (192M supply): 1.4% APY, ~228,631 NEAR
  • Month 8 (228M supply): 1.3% APY, ~249,145 NEAR
  • Month 9 (270M supply): 1.2% APY, ~271,123 NEAR

Longer-Term Considerations: At full adoption (500M NEAR), annual rewards could reach 29M NEAR, exceeding the 5M NEAR inflation allocation. Future proposals will need to address sustainable funding mechanisms, potentially including: allocating a larger portion of token inflation to veNEAR, implementing new revenue streams from ecosystem growth, adjusting reward formulas, or utilizing treasury reserves strategically.

Risks and Limitations

Yield Competition: NEAR holders can pursue alternative yields through leveraged staking (4.2% APY) and LP incentives using LSTs. However under a reduction of direct staking yields to approximately 4.5%, the competitive landscape becomes more favorable for veNEAR rewards. The proposed APY range (starting at 7.5% for the first 10M, then declining dynamically) positions veNEAR as attractive relative to all alternatives while remaining economically sustainable.

Behavioral Uncertainty: Token holder behavior in the early days is unpredictable. The proposed structure includes a cushion for fluctuating outcomes and will be continuously monitored for efficiency.

Budget Constraints: As veNEAR supply grows beyond this 3-month pilot, annual reward requirements will increase substantially. Future proposals will need to address long-term sustainability, including potential treasury allocations or adjustments to the reward formula. This pilot will provide critical data to inform those decisions.

Technical Specification

Reward Program Parameters

3-Month Pilot Structure:

  • Month 1: Fixed 7.5% APY on first 10M NEAR deposited
  • Month 2-3: Dynamic APY calculated as: APY = 198 / √(Total_veNEAR_Supply)
  • Total budget: 280,682 NEAR

Target Metrics:

  • Month 1: 10M NEAR in veNEAR
  • Month 2: 30M NEAR in veNEAR
  • Month 3: 60M NEAR in veNEAR (10% of staked NEAR)

Implementation Details

The technical and financial details of the reward distribution mechanism (including smart contract specifications, distribution frequency, calculation methods, and claiming procedures) are beyond the scope of this proposal and will be addressed in a separate technical implementation proposal. This governance proposal establishes the policy framework, budget allocation, and success criteria for the pilot program.

Funding Source

All rewards will be funded exclusively from the NEAR House of Stake Foundation treasury. The Foundation has allocated sufficient resources to support this 90-day pilot program.

Monitoring Metrics

Primary Efficiency Metric:

Efficiency Ratio = Incremental_NEAR_Gained_per_Month / Monthly_NEAR_Incentive_Spent

  • Target range months 1-3: 100-180+

Secondary Metrics:

  • Total veNEAR supply
  • Percentage of staked NEAR migrated to House of Stake
  • Active governance participation rates
  • Proposal submission and voting activity

Adjustment Mechanism

Gauntlet will provide monthly reports evaluating program efficiency during the 3-month pilot. These reports will inform the design of any subsequent incentive proposals, allowing the House of Stake Security Council to implement emergency adjustments during the pilot period. The Security Council will have the ability to unilaterally pause or adjust the incentive program at its discretion in the case of significant market shifts or a risk event.

Backwards Compatibility

This proposal introduces new reward mechanisms for the initial 90-day period and does not conflict with existing NEAR protocol staking. Users can continue staking NEAR through traditional validators while the veNEAR rewards program operates independently.

Critical Dependencies:

This proposal hinges on a concurrent or prior reduction in inflation by the validator set. The economic viability and the entire reward structure are based on a projected decrease in staking APY from approximately 9% to 4.5%. Without this inflation reduction, veNEAR rewards would be uncompetitive compared to standard staking, rendering the program ineffective.

To ensure validator decentralization is maintained despite reduced rewards, HSP-002 must be implemented. While not a direct technical dependency, HSP-002 addresses the economic impact on validators from inflation reduction, thus safeguarding network security within the broader tokenomics package.

No smart contract modifications to the existing staking infrastructure are required. The pilot phase will enable testing and refinement before long-term reward structures are finalized. Ideally, both HSP-002 and HSP-003 should be approved and implemented together as a unified tokenomics enhancement package.

Milestones

Milestone Target Date Deliverable Success Criteria
Month 1 Complete Launch + 1 month 10M NEAR in veNEAR Efficiency ratio 100-180
Month 2 Complete Launch + 2 months 30M NEAR in veNEAR Continued efficiency, user growth
Pilot Complete Launch + 3 months 60M NEAR in veNEAR 10% of staked NEAR migrated
Monthly Reports End of each month Gauntlet efficiency analysis Data for future proposals
Final Evaluation Launch + 3 months Comprehensive pilot report Recommendations for continuation
Follow-up Proposal Before month 3 ends Next phase proposal (if needed) Community approval for continuation

Budget & Resources

3-Month Pilot Budget (This Proposal)

Item Amount (NEAR) Notes
Month 1 Rewards 62,500 Fixed 7.5% APY on 10M supply
Month 2 Rewards 90,374 Dynamic APY on 30M supply
Month 3 Rewards 127,808 Dynamic APY on 60M supply
TOTAL REQUESTED 280,682 90-day pilot only

Funding Source: NEAR House of Stake Foundation treasury

Reporting: Monthly efficiency reports by Gauntlet including:

  • veNEAR supply growth
  • Rewards distributed
  • Efficiency ratio calculations
  • Recommendations for future proposals

Extended Budget Projections (For Reference Only)

These figures are provided for context and long-term planning but are NOT part of this proposal:

Period Estimated Amount (NEAR) Notes
Months 4-6 ~539,364 Would require new proposal
Months 7-9 ~748,899 Would require new proposal
Potential Year 1 Total ~1,568,945 Illustrative only

Any rewards beyond the initial 3-month period will require a new governance proposal with updated targets, budgets, and mechanisms based on pilot results.

Team & Accountability

Responsible:

  • Gauntlet: Modeling, monitoring, and monthly reporting during pilot
  • NEAR House of Stake Foundation: Initial funding and program oversight
  • House of Stake governance: Approval of any continuation proposals

Accountable to: House of Stake governance and NEAR community

Reporting Requirements:

  • Monthly public reports on pilot metrics (months 1, 2, and 3)
  • Comprehensive final evaluation at end of month 3
  • Recommendations for continuation, modification, or termination
  • Data and learnings to inform future incentive proposals

Pilot Governance:

  • This 90-day pilot runs as approved; no mid-pilot adjustments without emergency proposal
  • At month 3, rewards automatically cease unless a new proposal is approved
  • Follow-up proposal should be submitted before end of month 2 to allow discussion time

Security Considerations

Economic Security

  • Funding Source: The reward program is funded by the NEAR House of Stake Foundation treasury, ensuring clear accountability and no impact on protocol-level inflation mechanisms.
  • Coordinated Package: This proposal is part of a two-part tokenomics enhancement. HSP-002 maintains validator decentralization, and HSP-003 (this proposal) ensures governance participation. Together they create a more sustainable economic model in the event of a reduction in protocol inflation.
  • Budget Risk: At full adoption beyond this pilot, continued rewards would require either additional treasury allocations or alternative funding mechanisms to be proposed by the community.
  • Market Impact: Large reward distributions could create selling pressure; phased distribution and declining APY mitigate this risk

Gaming Resistance

  • Stake-weighted voting reduces incentive for Sybil attacks
  • Minimum lock periods for veNEAR discourage short-term reward farming
  • Monitoring systems will track anomalous behavior patterns

Smart Contract Risk

  • Reward distribution contracts must be thoroughly audited before deployment
  • Emergency pause functionality should be implemented
  • Multi-signature controls on reward pool management

Governance Attack Surface

  • Large veNEAR holders could theoretically influence reward rate adjustments
  • This is inherent to stake-weighted governance and mitigated by transparent discussion periods
  • Community can reject proposals that benefit small groups at ecosystem expense

Copyright

Copyright and related rights waived via CC0.

Disclaimer

Gauntlet is currently partnered with the Near Foundation to provide mechanism design and economic analyses. Our scope pertains to incentive design and infrastructure optimization, while other authors of this document drive the other scopes of work.

4 Likes
2

How do these APY’s compare in the market? Is it compelling enough to convert users/yield seekers from other protocols?

3

Why should we even incentivize people to participate in HoS?

I agree with HoS-002, but participation in governance is voluntary.
I don’t understand why we need to offer special rewards or push people to engage.
If someone doesn’t want to participate — they can simply stake their tokens elsewhere and earn APY.

1 Like
4

I’d think about maybe including this incentive in the tokenomics proposal instead of funding from the treasury. For example, reduce 5% inflation from 4.5% + staking 0.5% treasury to 4% stakers + 0.5% treasury for ecosystem development + 0.5% house of stake incentives. Or similar tokenomics with different numbers (the numbers above are just an example). The projected amount seems to be growing rapidly each month, and when incentives inevitably end (or decrease) without a clear continuation (by “alternative funding mechanisms to be proposed by the community“ I assume you have no plan on what to do after the incentives end), people just stop using the incentivized product.

I support having some sort of incentives, and believe that they are necessary for the first 3 months in order to facilitate the fair voting on the new tokenomics proposal(s), but after that I’d like to see a clear and sustainable continuation, instead of just giving more incentives for up to 9 months, not a fan of leaving our problems to the future generations. Can’t support this proposal though, since it depends on HSP-002. By the way, why does it depend on HSP-002, can’t it be executed without it?

Also, what do you mean by “annual rewards could reach 29M NEAR, exceeding the 5M NEAR inflation allocation“, are you assuming that the entire 0.5% inflation allocation should be used for veNEAR incentives? I believe the treasury is owned by Near Foundation, and they’re referring to it as “Ecosystem Treasury“, not “Governance Incentives Treasury“. I might be out of the loop, but I don’t remember them announcing repurpose of that treasury.

I don’t really care about Near Foundation’s money, they’re free to do as they want with it, just want to avoid any potential confusion between the NF-owned treasury.near (which collects the 0.5% inflation) and the House of Stake Foundation treasury (which allegedly “allocated sufficient resources”), as far as I know these are two independent treasuries. Makes even more confusion if you’re assuming the inflation reduction, which would make it 0.25% instead of 0.5%, so not sure where you got the 5M figure from.

Tbh I’d actually stop at ~60M NEAR locked in veNEAR, solid enough to be legitimate, but not too high considering that most users couldn’t care less about the boring governance stuff, including passive stakers who might prefer a ~12% APY at moremarkets or dewfinance or leverage staked near.

3 Likes
5

Hello,

This proposal was posted five days ago. After the seven day temperature check period, in about a day and a half, it’s eligible to become a canonical HSP proposal and to be put up for a vote.

As a next step, please submit it in markdown format as a PR to the proposals repository here: Sign in to GitHub · GitHub

Let me know if you have any other questions about the process.

Thanks!

Lane

6

Agree that more sustainable system is needed.

Ideally after treasury and inflation process gets fully transferred to House of Stake, this should be setup.

My general view - House of Stake can only have access to not more than the amount of staked NEAR in it. As it grows in legitimacy with amount of stake - more capital and parameters it can control (and more directly ideally).

So we need to bootstrap it with potentially less sustainable incentives to get to at least 25m NEAR. And even 25m seems low IMO.

1 Like
7

Part of it is governance. Part of it locking funds for longer than 2-3 days of staking but 45 days. This has a psychological effect that people don’t rush to when market fluctuates and in turn should be rewarded.

Reducing short term reward to others and rewarding long term stakers.

1 Like
8

There were 8 other proposals published as well. Why did you only accept this one?

Let’s not start this game of centralization and suppressing the proposals you don’t like.

You said the screening committee would not engage in censorship — correct?

1 Like
9

No proposals have been accepted. I just pointed out that these, like your proposals, need to be posted onto Github before being eligible for a vote. You already did that, so you’re one step ahead :slight_smile:

For the record, I’m taking “accepted” here to mean “merged as a draft into the proposals repository,” at which point a proposal becomes an accepted, canonical proposal that’s eligible for a vote. Yours will have to go through the same process - I’ll reply on github about next steps.

1 Like
10

@illia, I hope you don’t mind me sharing this candidly. I wanted to kindly ask if you could refrain from commenting on proposals for now.

Because of your significant influence within NF — and the fact that many processes and decisions inside the Foundation naturally revolve around you — even a casual comment from you is often perceived as a signal or call to action by delegates or by teams that work with (or receive grants from) NF.

As a result, what may be intended as a personal opinion can unintentionally shape outcomes or create pressure, making it harder to maintain open and independent discussion.

You have already shown great leadership and neutrality during the NDC elections when you chose not to vote or comment in order to avoid influencing the result — and the community truly respected that decision.

This is especially important now, considering that the pre-screening of proposals - Screering Commitee is fully controlled by NF and NF contractors.

Here is the proposal to move toward an elected Screening Committee, in line with the HoS transition plan:

Once we have a larger number of truly independent (non-NF) delegates and decentralized Screnning Commitee, your open commentary will no longer create such an imbalance — but at this stage, the ecosystem is still too dependent on your voice.

Thank you for understanding.

1 Like
11

its an interesting mechanism. without incentives it deters whales from large veNEAR unless the incentives of voting are much higher. meaning the outcome of proposals themselves incentivize them to vote.

imo lower emissions for near will be catastrophic.
primary reason incentive alignment unless house of stake can actually create real defi on near without the current easily botted metrics with incentives there is no reason to stake near nor have veNEAR. leaving defi the only option.

agreed. with Illia as CEO of NF and voting member of the NFC he should avoid direct engagement in HoS as a decentralized governance mechanism as he did with NDC. its overall a conflict of interest.

1 Like
12

7.5% on top of staking rewards? What is the lockup period, not info here neither on HoS website.

But you know what, I’m out, I don’t care anymore. Don’t like swimming in shit.

13

This is the first step toward raising the value of Near’s token, I agree.

14

I think this 90 day incentivization could attract mercenary participants that disappear once the incentives go as well. This is a band aid fix imo. If this prop is there for the community to buy time and reorganize further I can understand the reasoning for it. I find that more participation comes from heavy governance marketing (which NEAR is doing) & focus on economic proposals like inflation rate changes. That tends to bring a diverse set of stakeholders to the table. The HoS should be prepared for an influx of activity then. Participation is one aspect to assess (good metric you mentioned there) but there also needs to be a means of assessing quality of participation as well.

1 Like
15

I feel the proposal should clarify how the tokens will be distributed:

  • Will it be distributed based on NEAR locked or veNEAR (which grows)?
  • I assume the delegation will not affect the reward, is it correct?
16

I don’t understand why people say it’s not democratic when the turnout is low. Now is the time for the CEO’s bold action. If the participation rate is low even if you write or vote, then you can’t do anything, right?

17

I voted abstain…

I have some questions about the distribution strategy. We’re going to use 280k NEAR here, so we should be way more clear with our strategy. How are we getting this out publicly and to the right circles? We need people who actually do this work - Farcaster influencers, Twitter KOLs, actual marketers who know how to move markets.

We should learn from what’s worked before. Plasma (Tether’s chain) and Katana (L2 from Polygon) had pretty good launches. How did they market it? How did they do so well in the right circles and on Twitter? We should be studying these launches and copying what worked… granted at a smaller scale. Monad seems to be copying some of what Katana did actually.

Without a real distribution strategy, we’re just enriching the same people that already have NEAR… Of course we should support our core community, but we always need to be looking for growth. We need people competing for these opportunities from outside NEAR. That’s how we build momentum. Let’s make this somethign that grows our audience!

Also, can someone clarify the inflation math here? We’re reducing inflation but then adding these 2 proposals. Where do these numbers actually put us compared to before? Are we still net reducing inflation or are we back to the same levels? If we’re still reducing overall, this could be interesting. But if these proposals make us inflate more than before, we should really rethink the numbers. Also, what happens if the validators don’t update their nodes thereby vetoing the inflation decrease? Is this proposal and the other one scrapped? They probably should be right?

If we’re spending 280k NEAR on incentives, this is a real opportunity to make this a MAJOR marketing event. Let’s turn this into a massive marketing push that gets in front of new people and makes real noise. Otherwise this will be an expensive user retention exercise without much to show for it.

IMO we should make this an event that brings fresh blood into the ecosystem, not just pay existing holders to do what most of them would do anyway.

Again I’m abstaining instead of voting against mostly because I just need to get more context, as I might be missing something.

7 Likes
19

Makes sense overall, I agree with others that a short bootstrap phase is useful to kickstart engagement, but it really needs a clear sustainability path after the first few months.

Instead of continuous treasury spend, it’d be great to see incentives gradually integrated into tokenomics or tied to ecosystem growth.

Supportive of the pilot as a way to gather data and test behavior, but the long-term goal should be a self-reinforcing governance economy, not a temporary subsidy.

1 Like
20

I voted In Favour of the HSP-003 proposal.

With the recent successful inflation reduction, the staking APY on NEAR has dropped from 8–9% to 4–5%. This is the right time to introduce veNEAR incentives to encourage more users to lock their NEAR for veNEAR in exchange for the higher reward.

To be transparent, governance is often seen as “uninteresting” by many token holders but higher APY acts as a strong incentive for users to lock their NEAR, and over time, this naturally encourages them to pay attention to House of Stake governance. This proposal can serve as the first wave of onboarding, bringing more users through the “governance door,” while simultaneously increasing long-term locked NEAR from the usual 3-day unlock to a 45-day lock cycle.

This proposal also fairly rewards the early supporters who locked into veNEAR before incentives were introduced, ensuring that those who believed in the system early are recognized and empowered with greater voting influence and rewards.

However, I acknowledge as mentioned by others that this model is not sustainable long-term. The community and HoS team should work together over the coming quarter to design a more sustainable incentive framework. Monthly data reports should be reviewed to understand what works and what doesn’t, so we can refine the program into a balanced, long-term veNEAR incentive model.

2 Likes
21

I’ve voted No, with the intent to support a revised version that couples veNEAR incentives with concrete implementation details and ecosystem-growth criteria.

I’ve voted no because I’d prefer to contribute to a proposal that focuses incentives to the users of dApps which bring new staked Near into the system. The current proposal rewards anyone who locks NEAR into veNEAR, which means existing, engaged early adopters could lock large positions for a short window and earn high APY with no new user or validator growth. Also, I’m not convinced that we should incentive people to participate in governance. People should participate in governance because they care about the problems being addressed and want to take part in crafting the solutions that meet their needs.

The current proposal treats veNEAR holders as the reward target, but the goal of catalyzing network effects by spiking momentum at launch would be more sustainably achieved if we targeted the building of growth flywheels that 1) increase the quantity of staked Near, 2) facilitate their users to earn even more rewards by acquiring veNear

I’m interested in helping draft a proposal that offers incentives to dApps that activate users, to encourage wallets and client apps to drive staking inflows and governance participation by offering the proposed APY bump as incentive to their users.

veNEAR is a governance primitive, and as I understand it, our primary economic driver is still staked NEAR volume. By tying rewards to staking inflows via partner dApps, we could:

  • target improving validator decentralization (HSP-002’s goal), and
  • use a fan-out approach across multiple dApps, versus gov.houseofstake.org alone, to expose a diverse set of users to governance participation

Perhaps I’m getting too into the weeds on how this program will be implemented, but I do feel that the implementation of these rewards is as important as the higher level goal and success criteria.

3 Likes