HSP-029: Establish a 24-Month Issuance Ramp to a 1.6% Target Rate Of NEAR Token Emissions

[SalTernullo]

gm, and thanks. Both questions are fair, and the first needs to be corrected before we go to a vote.

You are right on the $51M point the updated figure is below which is actually $400k less. It’s the endpoint issuance gap of 11.76M NEAR per year calculated at $4.30.

$45.5M to stakers and operators and $5.1M to the treasury. Here is the split

Twenty-nine pools charge 50% or more and they are self-capital pools which includes ours so their rewards count as capital rather than operator income.

I think this impacts the questions to some extent but you can let me know. The actual infrastructure for the full 406-node set costs about $1.33M a year at our benchmarks (which we modeled extremely conservatively in terms of cost likely 3-4x over the avearge) and almost none of the cut comes from what operators get paid; about 85% of it is a cut to the return on staked capital. So the real question is whether 3.37% gross, about 3.18% net at the stake-weighted fee continue to keep capital staked. My view is that it will and gradual expansions in valuation from a more balanced economy will enhance it.

Based on price at the same block 216,701,043 here is the math:

On an aggregate basis the operator commissions cover machine costs down to about $1.41 at 1.6%, against about $0.90 at 2.5%. The weak point is distribution, not the aggregate, which is why I think the self-sufficient count is actually the number that matters for monitoring.

The posted version doesn’t specify thresholds which I’ve explained the logic for in other response and my view is that the forum is always open for proposals and if there is a negative impact we can run a fast track proposal to freeze the emissions change, but I think this is a very unlikely scenario.

On the revenue side I am aligned with the math as compared to gross data but what actualy matters is net retained NEAR for the protocol terasury. I also agree on buybacks versus burns too. Retained tokens reduce the float but do not change supply. This is a longer discussion that is more theoretical at this stage and no protocol has empirical data on 5-7 year horizon to prove one way or another. Right now its really just different design choices and the jury is out to see what creates the most enduring value for a token.

On the HoS figures point, I think my sentence lost its second half so here is the framing. At 17% tax drag, NEAR leaks about $21M a year and the cut reduces that by about $8M. At 37%, the leak is about $47M and the reduction about $17M. So $8M to $17M is right and we will correct the post before it goes to vote.

[SalTernullo]

I’ve tried to be comprehensive in responding and contributing to the dialogue and discussion here. There are multiple tweaks to the proposal that have come from this discussion thus far and I look forward to speaking tomorrow with everyone on the Ecosystem call.

Thanks to everyone for your time and contributions so far. Absent anything material in the next few days, we are planning to post this for the voting process (with the tweaks promised in replies) on Monday of next week.

In the meantime, I hope everyone locks their NEAR in HoS so we have good participation in the vote.

-Sal

[fiatisabubble]

Tomorrow’s HoS GM Call will include a breakdown of this proposal, followed by a Q&A with its proposal author. Consider joining if you prefer a video call setting to ask questions and share feedback. Details below

Join us for our next GM Community Call tomorrow. We’ll be covering governance updates as well as have Sal Ternullo from SVRN present his proposal for a gradual reduction to NEAR’s token emissions, including a Q&A session.

Join us tomorrow October 15 4:30PM UTC

Link to the Google Meet

[arpoas]

@arpoas

I have it on my todo list to suggest the 5% commission floor. I am just little stuck for next 2 weeks. If you or whoever else opens it before I get to it, I will definitely support it.

@rdp4by

It seems to me that after this proposal, we will need to open a new topic and discuss the steps required to encourage large holders to launch their own nodes. This seems to be the only sustainable solution. Subsidizing nodes that do not have “skin in the game” doesn’t appear healthy, as they will inevitably suffer as competition increases and issuance decreases.

@JoeSixpack

I agree with very little in this thread but a commission floor to mitigate the race to the bottom in validator fees (necessary to remain eligible for delegated stake)

@SalTernullo

On the 5% minimum commission I think this is worth its own thread and discussion.

Setting a commission floor was mentioned several times in this thread. I have proposed 5% floor as a possible solution to improve small validator economics, and I wrote that I am planning to open a new topic for discussion about it.

I have started looking into it, and although I realize it is out of the scope of this thread, I feel obliged to reconcile my previous suggestion of 5% that was based on validator break-even economics, with the data below that focus on the potential impact of commission floor on stake concentration. Data are generated by Gemini AI based on the validator set on 18th October 2026.

My conclusions from the above data:

• Most validators already charge at least 5% commission.

• Setting a minimum commission 2% would affect around 30% of stake. Setting it higher than 2% would have marginal impact and is probably not worth the risk of reducing max available staking yield further.

• If minimum commission is set to 2%, then approximately 88% small validators with uptime ≥ 99% and stake < 100,000 NEAR would be able to charge higher commission than they are charging now.

• Approximately 20% of total stake is staked with large validators who have > 1000000 stake and charge commission 0% or 1%. Other large validators already charge higher commission. To make an assumption that even half of these 20% would be unstaked by very conscious stakers and moved at same commission to smaller stakers is very optimistic if not naive. But let´s assume for the sake of the argument, that 10% of total stake could be “de-concentrated” as a result of setting a minimum commission 2%. Is it worth the effort and risk? May be not purely from de-concentration perspective, but it would also improve economics for 88% small validators.

Based on this data I will most likely not be opening a thread about 5% commission floor. Reducing maximum available yield to stakers without meaningful potential effect on stake concentration would be in my opinion contra-productive.

However, I still see a general discussion on this topic as potentially useful. I would be hesitant to put a specific floor number suggestion out at this moment without further analysis. Preliminarily 2% seems a good impact / risk trade off based on the above data.

For eventual further discussion about this subject, let´s do it in another thread.

[rdp4by]

Thank you for the analysis. I agree that expecting delegators to migrate en masse from large pools to smaller ones after commissions are equalized would be overly optimistic.

However, I would consider another potential mechanism for reducing concentration: large holders who currently delegate their tokens launching their own validators. Advances in AI and automation could reduce the operational burden, although infrastructure costs would remain.

The economic incentive arises when two conditions are met:

S ≥ S_min(t)
S × r × c × P > C_node

Where:

• S — the holder’s own stake in NEAR;
• S_min(t) — the current minimum stake required to participate in the active validator set;
• r — annual staking yield before commission;
• c — commission paid when delegating, expressed as a fraction of rewards;
• P — the price of NEAR;
• C_node — the total annual cost of running a validator, including hosting and the operator’s time, expressed in the same currency as P.

All else being equal, a 2% commission requires 2.5 times as much stake to cover the cost of running an independent validator as a 5% commission. This comparison assumes comparable validator performance and applies to the economic break-even threshold; the minimum stake requirement must also be met.

Therefore, limited potential for migration between existing pools does not necessarily capture the full effect of a commission floor.

To assess this mechanism, we would need to examine the distribution of individual delegators by stake size, rather than just validator pool sizes. How many independent holders could—and would—launch their own validators at each commission level?

This does not establish that 5% is better than 2%, but it adds a potential mechanism that these tables do not evaluate. Additional nodes would improve decentralization only if they were operated by independent participants.

[KamBenbrik]

Hello team, this is Kam from Bitwise. Thank you Sal and the SVRN team for the work on this proposal. Great to see an engaging discussion with the community on this forum.

What I like about this proposal is its simplicity: it changes one parameter and this change doesn’t happen overnight: it’s a gradual decrease over 24 months which gives everyone (especially validators) time to adapt.
When there is a discussion about inflation reduction, I think it’s always important to take a step back and look at the bigger picture. Reducing inflation addresses supply, but we also need to give people more reasons to acquire, hold and use the token. It’s important that these two work in tandem and we’ve seen a lot of great work happening on the demand side for NEAR as well.

We’ve seen the success of Near Intents in connecting different ecosystems and offering one of the best cross-chain experiences alongside the work on Confidential Intents and the amazing work currently being done with Near AI. Improving the supply side makes sense when there is constant work to grow demand, bring in users and build products that people want to use. This is exactly what the team is doing with such great execution.

We’re following the different discussions, listening to the community and gathering feedback. We’re approaching this with an open mind and want to make Near one of the best ecosystems in the space. Great to see the engagement on this discussion!

[rdp4by]

@arpoas, your figures appear inaccurate compared with an on-chain check on October 19:

• 22 active validators charge exactly 1%, rather than 140–160.
• A 2% floor affects 18.24% of stake; a 5% floor affects 28.08%.
• Among 205 pools with less than 100,000 NEAR, only 5 charge below 2%, and 12 below 5%.
• The 88.1% in your table represents the segment’s stake share, not its validator count.

Our snapshots are one day apart, so access to your underlying dataset would help reconcile these differences.

I agree that expecting substantial migration from large pools to smaller ones is optimistic. Another potential effect is encouraging existing delegators to launch their own validators.

For stake delegated at a single commission rate, the conditions are:

S ≥ S_min(t)
S × r × c × P > C_year

Where:

• S — own stake in NEAR;
• S_min(t) — minimum stake required to participate;
• r — annual staking yield before commission;
• c — commission charged by the delegation alternative being compared;
• P — NEAR price;
• C_year — annual operating costs.

The relevant benefit is the commission saved, since delegating already earns staking rewards.

A 0% minimum commission does not mean all delegators currently pay 0%. Many use pools charging 5%, 10%, or more. However, if a comparable 0% pool is available, running a node cannot beat that alternative through commission savings alone: there is no commission to save, while operating costs remain.

Assuming NEAR = $5, 1.6% issuance, a 90/10 reward split, and an unchanged staking ratio, modeled gross annual yield is 3.144%:

Monthly operating cost	Break-even stake at 2% commission	At 5%	At 10%
$50 — hypothetical minimum	190,821 NEAR	76,329 NEAR	38,164 NEAR
$100 — budget	381,643 NEAR	152,657 NEAR	76,329 NEAR
$200 — base assumption	763,285 NEAR	305,314 NEAR	152,657 NEAR
$320 — high-cost	1,221,256 NEAR	488,503 NEAR	244,251 NEAR

These are illustrative cost scenarios. All economic thresholds exceed the smallest observed active stake of approximately 9,826 NEAR, which is not a guaranteed future admission threshold.

I also counted candidate addresses across all 399 active pools, covering 212,138 unique addresses with positive staked balances at block 220632378. Balances belonging to the same address were aggregated across pools.

The following table compares operating a node with each address’s current delegation portfolio. It does not assume delegators switch to the cheapest available pool.

Monthly cost	Viable vs current fees	Total at 2% floor	New at 2%	Total at 5% floor	New at 5%	Total at 10% floor	New at 10%
$50 — hypothetical minimum	512	550	38	674	162	885	373
$100 — budget	385	407	22	481	96	636	251
$200 — base assumption	250	274	24	308	58	423	173
$320 — high-cost	177	183	6	237	60	304	127

Viable vs current fees means that, under the modeled yield and costs, operating a node would outperform the address’s current delegation portfolio. It does not mean it would outperform delegation to an available 0% pool.

Total includes these addresses plus New candidates crossing break-even because of the floor, assuming they remain with their current pools. Existing commissions above the floor remain unchanged.

For each address:

Savings before = P × r × Σ(S_i × c_i)
Savings after = P × r × Σ(S_i × max(c_i, floor))

An address qualifies when savings exceed operating costs—even slightly—and its combined stake meets the participation threshold used in the model. No additional profit margin is required. Comparable validator performance is assumed.

Known pool-owner and liquid-staking protocol addresses are excluded from candidate counts. For lst-pool.near, token balances were converted to NEAR using its on-chain exchange rate.

These are candidate addresses, not a forecast of independent operators. Common ownership, custodial or lockup restrictions, and additional incentives are not modeled. Balances in inactive pools are outside the dataset.

At $200/month, a 5% floor creates 58 additional candidates relative to their current portfolios, bringing the total to 308. The other 250 already pass this comparison because they currently pay sufficient commission.

A different comparison would assume everyone can delegate at the lowest available rate: 0% today and exactly the floor after its introduction. Under that assumption, no address benefits from running a node through commission savings before the floor. Afterward, eligibility depends on total stake exceeding the thresholds in the first table. Those address counts require a separate calculation; the portfolio-based counts above should not be interpreted that way.

[Yuen]

I will be voting IN FAVOUR of reducing NEAR token emissions to 1.6%.

I would like to see $NEAR become increasingly scarce over time, with lower emissions bringing us closer to a potentially deflationary token economy.

However, this raises an important question: What comes next?

If NEAR emissions are reduced to 1.6%, could we eventually move towards 0%? And if so, how do we ensure validators remain sustainable without relying heavily on newly issued tokens? Should we explore alternative economic or security models, or rethink how validators are incentivized?

During Q4, I would like to initiate deeper discussions with industry experts, tokenomics specialists, and validators, together with Sal, to explore the long-term sustainability of NEAR’s economic model.

Reducing inflation is a step forward, but ensuring validators remain profitable, decentralization stays strong, and network security is maintained is equally important.

The goal isn’t just be to make $NEAR scarcer. It should be to build a sustainable economic model that supports the network for decades to come.

[nearforce]

Is this proposal in vote or not @SalTernullo ? why is it still not proposed to vote ? Are there any issues with big nodes?

[rdp4by]

@Yuen

Should we explore alternative economic or security models, or rethink how validators are incentivized?

We need to motivate big holders to run their own validators. Assuming NEAR = $5, 1.6% issuance, a 90/10 reward split, and an unchanged staking ratio, modeled gross annual yield is 3.144% . If we put a 5% fee floor, we will have a 308+ potential validators with own stake. Their operating costs will be lower than a 5% fee they would pay to other validators as a fee.

[nearforce]

Why linear unstaked big chunks on many validators last days ? any one has an idea?

[rdp4by]

I don’t but perhamps their stakers unstake? Last days total staked amount is grow tho.

[SalTernullo]

Yes its live and being voted on now https://gov.houseofstake.org/proposals/29

[nearforce]

they unstaked huge amount from numerous mid nodes lowering their stake to dust …

[arpoas]

@rdp4by

@arpoas, your figures appear inaccurate compared with an on-chain check on October 19:

Yes, my data may not be exact. As mentioned in my comment, it is AI generated data. I did not manually go through the validator set to verify it. I posted it to show one way of approaching the analysis rather than as a definite proposal. Your analysis is also interesting. Let´s discuss it in another thread.

@rdp4by

• The 88.1% in your table represents the segment’s stake share, not its validator count.

Yes. Thanks for pointing this out. It is share of stake and my statement that economics of 88% small validators could be improved is inaccurate. Using the validator count generated by the AI (may not be accurate), it is 82.5-86.6% of validators in that segment.

I was surprised by the relatively small portion of stakers motivated by purely economic reasons (those who are staking with 0-1% commission and good uptime). It is only part of this small segment that could be motivated by minimum commission to set up their own validator so I have decided to water down my 5% commission suggestion. I don´t discard it, but it needs thorough analysis from various angles and based on exact data.

[Chip_at_Twinstake]

I think there is a small discrepancy on the ramp table.

The 6th Month gross staking yield is listed as 4.622%, but using the table’s assumptions (90% to stakers, staking ratio held at 42.71%) it comes out to: 0.9 × 2.275% ÷ 0.4271 = 4.794%. The other rows check out (5.268 / 4.320 / 3.372), and Figure 1 does plot it at ~4.79% at month 6, so it looks like a typo only in the table.

Let me know if I’m missing something

[DDeAlmeida]

Correct LiNear is removing all staking.
Meta Pool is removing NodeStudio Program 1 staking too.
Node Studio 2 is ending on November So another wave in november/december