HSP-011: A Call for Illia Polosukhin to Step Down from Either NEAR Foundation Council or CEO Position to Restore Democratic Governance and Sustainable Tokenomics

House of Stake Proposals
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HSP-011: Proposal for Illia Polosukhin to Step Down from Either NEAR Foundation Council or CEO Position to Restore Governance Balance and Ensure Sustainable Tokenomics

Preamble

HSP: 011
Title: Proposal for Illia Polosukhin to Step Down from Either NEAR Foundation Council or CEO Position to Restore Governance Balance and Ensure Sustainable Tokenomics
Author: Blaze
Type: Process
Created: 2025-10-21
Status: Draft

Summary

A call to action, for Illia Polosukhin, NEAR Protocol co-founder and NEAR Foundation (NF) CEO, to voluntarily step down from either his NF Council (NFC) seat or CEO role. This collective action addresses emerging risks in power concentration, highlighted by recent tokenomics pilots, stewardship questions around the USN spindown, and a protocol upgrade that raised valid concerns among validators. By embracing this change, we can foster a more democratic balance, empowering the House of Stake (HOS) to lead inclusive, value-driven reforms. Together, this reaffirms NEAR’s core values of transparency and community stewardship for long-term growth.

Motivation

NEAR’s governance is designed to distribute authority democratically, ensuring no single perspective overshadows the collective will. However, the dual roles of Illia as NF CEO and NFC member create overlapping influences on key areas like NDC elections, HOS proposals, validator emissions, tokenomics, protocol upgrades, and fund management. While intentions may be collaborative, this structure can unintentionally amplify certain voices, including institutions and aligned partners, at the expense of broader grassroots participation.

Recent NF-supported tokenomics initiatives (inflation halving, HSP-002 small-validator rewards, HSP-003 veNEAR boosts) offer opportunities but also underscore areas for improvement in our shared process, as reflected in the NF blog announcement: Supporting Community Proposals to Upgrade NEAR Tokenomics: Halving Inflation and Introducing Rewards to Support Small Validators and veNEAR Holders - NEAR Foundation.

Key challenges include:

  • Building Toward Real Growth Beyond Metrics: Reducing inflation from 5% to 2.5% and launching pilots are steps forward, but we need comprehensive roadmaps for adoption, fee accrual, and ecosystem vitality to sustain validator yields (~4.75% at 50% staked) and prevent small-validator attrition—preserving our Nakamoto coefficient across 300+ nodes and the decentralization we all value.

  • Ensuring Independence in Endorsements: Projects like Aurora, Hot_DAO, and other NF-alinged entities contribute meaningfully, yet treasury-backed alignments can influence “community” outcomes. Greater separation would strengthen the authenticity of HOS-driven decisions.

  • Transitioning from Temporary to Enduring Incentives: The 3-month veNEAR pilot (APY from 7.5% to ~2.6%) and Metapool boosts provide short-term liquidity support, but evolving them into stable mechanisms could better encourage ongoing HOS involvement and reduce volatility.

  • Empowering HOS-Led Alignment on Value Creation: Without dedicated HOS efforts to rally stakeholders around DeFi growth proposals (e.g., intents and yield innovations), these efforts risk falling short. A more balanced framework would prioritize collaborative innovation over directive approaches.

  • Verifying and Scaling High-Potential Features: NEAR Intents show immense promise with billions in volume for AI-driven abstractions, but addressing community-raised concerns like potential wash-trading through transparent audits would build collective confidence.

Regarding the recent protocol upgrade process, a community proposal to adjust emissions did not gain sufficient validator support. Subsequently, the nearcore v2.9.0 upgrade proceeded, with NearOne clarifying they did not initiate the force—pointing to NF’s role in coordination under Illia’s leadership. This placed validators in a challenging position: achieve the 80% stake threshold or face reward disruptions for delegators and potential LST impacts from Metapool or LiNEAR. The absence of a testnet phase, proactive dialogue in Telegram or governance forums on process and effects, and tools for real-time threshold monitoring amplified uncertainties. Community feedback highlighted these gaps, and while responses were limited, this marks a departure from NEAR’s tradition of consensus-based upgrades—prompting us to reflect on how to make future processes more inclusive and less binary for all stakeholders.

Similarly, the handling of USN spindown donations to the NDC community treasury raised stewardship questions: An initial proposal to redirect NDC community funds from the community trust to HOS lacked explicit NEAR consent, leading to grassroots outcry from community representatives. Legal guidance confirmed the need for Guernsey trust-compliant approvals, underscoring the importance of clear protocols to maintain trust and separation of responsibilities.

Conflicting Oversight in HOS Security: As a member of the HOS Security Council—tasked with reviewing security measures and enforcing violations in HOS governance—Illia’s concurrent NFC and NF CEO positions create inherent conflicts, blurring lines between executive operations, strategic oversight, and impartial enforcement within the same ecosystem framework.

These moments, while not defining our ecosystem, highlight opportunities to reinforce democratic principles—addressing NDC process concerns and upholding separation of powers. By evolving together, we protect NEAR’s innovative edge, transform pilots into lasting progress, and nurture the trust that unites us.

Specification

Proposed Action

We invite Illia to step down from one role by December 31, 2025, to enhance democratic equilibrium:

  1. NFC Member: Allowing focused CEO leadership without governance overlap.

  2. NF CEO: Enabling objective Council contributions independent of operational duties.

Implementation Steps

  1. Transition: Announce within 30 days of community endorsement; facilitate a 3-6 month handover for continuity.

  2. Replacement: In the case of CEO transition, initiate open NFC nominations followed by an on-chain veNEAR community vote.

  3. Safeguards: Propose a follow-up HSP to update the HOS charter, prohibiting dual roles, requiring transparency disclosures, and establishing:

    • Annual independent audits of NF-HOS funding, including assets like USN remnants.

    • Comprehensive validator sustainability strategies with permanent incentives.

    • Inclusive DeFi working groups to develop and vet growth-oriented proposals (e.g., Intents volume verification).

    • Defined fund transfer guidelines mandating Guernsey-aligned community approvals.

    • Standardized upgrade protocols: Required testnet validation, dedicated validator forums for input, transparent progress tracking, and thorough impact evaluations prior to votes.

  4. Review: Implement quarterly HOS reviews of governance influences (e.g., funding decisions, vetoes, upgrades) and outcomes (e.g., post-halving participation; target Nakamoto coefficient >10).

Voting Mechanism

On-chain HOS vote: Simple veNEAR majority with a 20% quorum, ensuring broad community representation.

Rationale

In other ecosystems, concentrated roles have led to forks and lost momentum; Illia’s 2023 dual appointment, while well-intentioned, merits reevaluation to prevent unintended biases in tokenomics collaboration, emissions adjustments, and processes like USN handling or v2.9.0 rollout. Evidence of influence in NDC and HOS underscores the need for proactive balance.

This adjustment empowers HOS autonomy: Linking emissions to DeFi performance, conducting rigorous audits, solidifying pilots, securing funds through consensus, and refining upgrade standards. It’s a democratic step forward, honoring NEAR’s ethos of openness to avert risks and elevate community-driven success.

Backwards Compatibility

Fully compatible with existing protocol and NF operations; introduces resilience through retroactive transparency measures without disrupting prior commitments.

Test Cases

N/A (governance process improvement).

Reference Implementation

N/A. Subsequent HSPs to detail audit, DeFi, fund, and upgrade frameworks.

Security Considerations

Gradual transitions minimize disruptions; role diversification reduces single points of influence. Community voting upholds democratic safeguards.

References

Copyright

Copyright (c) 2025 Blaze ~ Founder. Validator. Community Member. CC0 1.0 Universal.

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I think a temporary mute from the forum is in order, the “proposals” tag is not for troll proposals

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objective feedback welcome. otherwise your reply qualifies as trolling.

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Sorry didn’t realize you were serious about this. Objective feedback is in telegram, on forum I only post objective feedback on sane proposals

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image621Ă—734 101 KB

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I’ll delegate my veNEAR to you.

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updated to: Call to Action.
also added another conflict of interest being on the HoS security council.
let me know if you have other considerations.

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vadim. always good to see you active in governance. :grin:

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