NEAR Governance Discussion: Sovereign Fund

[illia]

NEAR has introduced significant token economics updates in recent months, notably halving inflation in late 2025 and introducing the NEAR Intents fee switch, which routes Intents fees into $NEAR buybacks, earlier this year, and most recently staking for NEAR AI inference. These were important upgrades to make NEAR economics stronger and more sustainable while also accelerating the flywheel across all NEAR products including Intents and NEAR AI.

I consider the first five years of NEAR Mainnet as the bootstrapping phase. Our vision has always been the same: NEAR is working to ensure that all people can control their own assets, data, and power of choice. We’ve built and evolved a lot of first-rate technology and products in the first five years of the journey, now achieving steady revenue generation, fully unlocked NEAR supply, and establishing viable decentralized governance with House of Stake. Now as we approach the sixth anniversary of Mainnet, I want to propose the next phase of NEAR’s evolution, reflecting the maturity and success of the ecosystem – I feel this is a good time to propose a new way of making token economics more sustainable.

I propose that 1) we should establish a protocol sovereign fund that uses its proceeds to pay for public goods of the ecosystem, such as security 2) the fund’s treasury should be composed of the current and future protocol treasury as described in the NEAR White Paper, protocol revenue earned to date, and future protocol revenue.

I intend for this post to be a conversation starter between stakeholders including validators, token holders via House of Stake, and members of the NEAR community. While my role in the NEAR ecosystem as co-founder of the protocol and CEO of NEAR Foundation is unique, I believe our ecosystem belongs to all of us and is not truly resilient or decentralized if the founder is calling all the shots. So, this is very much a proposal and not a mandate.

Lessons from the Real World

One inspiration I have been studying is sovereign funds of countries like Norway and Singapore. They have leveraged their land sales and oil revenue, which is naturally cyclical in value over time, into national sovereign wealth funds that reinvest in productive assets. These generate yield, a percentage of which can be used for public services. A similar concept is university endowments, for which the yield is used to fund university initiatives while preserving the principal.

This sovereign wealth fund approach enables the growth of the funding base over time while protecting against the cyclical nature of commodities, while generating enough surplus to provide services to citizens after an initial bootstrapping phase. I think that’s where NEAR is today, and it’s why I want to evolve our economics in this direction and experiment with how best to direct revenue.

Reducing Inflation

Every L1 today funds security through inflation. Even Bitcoin, the “fixed supply” asset, still has inflationary rewards (although the rate is declining over time). On Proof-of-Stake systems, inflationary rewards serve two functions: incentivizing enough stake to participate in the delegation, and paying validators who run nodes and provide a service to the network. When a protocol inflates at 5%, non-staking holders effectively lose 5% of their share of the network every year. Most L1s accept this as the price of security.

We’ve already observed, in NEAR and other ecosystems, that as the number of nodes grows, there is a need to incentivize the long tail out of band as their percentage relative to overall stake is small. Last year we established an initial program to pay smaller-stake validators a fixed USD value. Predictable payouts are a much better incentive for smaller validators.

Given these learnings as well as the growth of real revenue on NEAR, I want to explore new economic models. I see the sovereign fund approach as a good potential fit to better align security with the long-term sustainability of token economics, in parallel with reducing inflation.

In the long term, if this experiment works, the NEAR Sovereign Fund may be able to cover the full cost of network security and public goods and create an opportunity for NEAR to become a fixed supply asset.

The Sovereign Fund Vision

The NEAR ecosystem today has revenue generated from a transactional business which is cyclical in nature, as crypto has now gone through enough cycles to understand. NEAR also has other business lines including subscriptions and per-inference token payments. The NEAR ecosystem could divert this revenue to pay for security and other public goods directly, but that would not be a sufficiently future-proof system in the case of volatility or long bear markets.

A different option for revenue that people ask me about, and which other ecosystems have tried, is burning tokens. This is a useful mechanism to remove additional supply, but it’s really just a way to offset inflation in the short term. Inflation will always compound and revenue won’t always grow as fast to offset it. On the other hand, if inflation is turned off, burning leaves the ecosystem without future funding. Here’s a simple mental model: let’s say 1% of the total supply has been generated by revenue. If that 1% were simply burned, then everyone in the ecosystem got 1% wealthier in theory, but the effect is negligible given the overall volatility of that asset. If we instead took that supply and put it to work into a lending protocol, generating, say, 5% from market makers and traders, that 1% stays productive inside the ecosystem and keeps generating additional funding while also keeping up demand for the asset.

Using the ecosystem’s revenue to buy $NEAR, and then using some part of the yield to fund ecosystem public goods, is a much more long-term-aligned approach. While sovereign funds generally hold a liquid fiat asset, in the NEAR model, the fund would hold $NEAR and generate yield by utilizing the underlying token in a range of ways. While yield comes with some risk, the goal here is to mitigate and diversify that risk, as examples of the sovereign fund model have proven out over time – the sovereign fund of Singapore is 45 years old and Norway’s is 36.

The NEAR Sovereign Fund can start slowly with existing treasury funds––the current protocol treasury of approximately 30M in $NEAR–– as its starting base. After an initial phase to confirm that the approach is working, NEAR can direct revenue and incrementally redirect more emissions to the fund, reducing effective inflation while still providing rewards to core validators and stakers.

Token holders who want to participate in the Sovereign Fund can do so through existing House of Stake delegation mechanisms. In parallel, as the Sovereign Fund is starting to operate, House of Stake would also expand the NEAR Validator Support Program to gradually onboard more validators into the new rewards structure.

Over time, if this proves to be successful, NEAR could move towards a fixed supply of $NEAR, gradually reducing total inflation over time and transitioning all validator rewards to the new model. I think this will make NEAR economics stronger over time, sustainably fund public goods and core needs of the ecosystem, and strengthen the treasury for the longer term against changing market conditions.

The Treasury Proposal

This is the first phase I’m proposing now, to kick off the fund and begin the experiment. This would roll out gradually in milestones to ensure smooth transitions and proven progress.

• Establish NEAR Sovereign Fund:a treasury managed under governance-set parameters and designed to generate $NEAR-denominated yield

• Protocol revenue (scope set through governance) would flow into the NEAR Sovereign Fund in the form of $NEAR

• A percentage of yield would be used to pay for public goods: the Validator Support Program, MPC providers, and other services

• House of Stake delegates can participate through existing delegation mechanisms and share in the yield, as has been proven with past delegate reward programs

Next Steps

Please leave comments and ideas below over the next two weeks. I intend to discuss with as many stakeholders as possible to gauge support for the idea and explore possible next steps to establish the Fund, if people are supportive.

[haenko]

What specific yield-generating strategies would the Sovereign Fund use? Would it be limited mainly to staking and delegation, or could it also invest in DeFi protocols, ecosystem projects, stablecoins, or traditional assets?

[NEAR_MAXi]

I like the direction of this proposal. If NEAR is beginning to generate meaningful protocol revenue, it makes sense to convert some of that revenue into a permanent capital base that can eventually fund security and public goods without relying on dilution forever. With the current protocol treasury of approximately 30M in $NEAR, however, it would be helpful to make the economic model more explicit. If the fund’s unit of account is NEAR, passive staking should be the benchmark: any active strategy should either earn more NEAR after losses and expenses, or fund useful ecosystem services more efficiently. Staking itself is scalable, but it is mostly a share of issuance, not a new source of revenue that can replace issuance.

The main constraint is not the supply of capital—it is demand for NEAR capital. There is plenty of NEAR available to lend on Rhea, but not much organic demand to borrow NEAR or most other crypto assets, particularly in current market conditions. This is something lending markets across crypto have repeatedly discovered: attracting deposits is easy; finding productive borrowers outside of stablecoins is hard. Deploying a large treasury position would likely compress rates further rather than generate meaningful incremental returns. The reality is that NEAR does not currently have a DeFi ecosystem deep enough to absorb this amount of capital productively.

One option would be to use part of the fund as protocol-owned liquidity for Rhea and/or NEAR Intents, but that is not free yield. Providing NEAR liquidity against stablecoins or other assets exposes the fund to impermanent loss and can leave it with materially fewer NEAR if the token appreciates. Solver inventory on Intents similarly requires the fund to hold and rebalance other assets. The fund could sell covered calls to earn premiums, but risks losing NEAR into a rally.

It could also stake through a NEAR LST, borrow stablecoins against it and deploy those stables into NEAR or other assets while retaining the underlying NEAR exposure—perhaps this is closer to what is intended. If leverage is used at all, it should be at a conservatively managed LTV.

So I am supportive, but I think the proposal needs to clarify whether this is primarily a staking endowment, a provider of protocol-owned liquidity, or a leveraged treasury using its NEAR denominated balance sheet to finance additional investment assets. The latter two are more interesting, but they are also serious investment operations. Longer term, MPC or inference providers could be required to bond NEAR as economic security, while the fund could provide secured credit to solvers in exchange for an additional share of user fees. Whatever the mandate, it should have professional management, defined exposure limits, ideally independent risk oversight, and transparent reporting against a NEAR-denominated benchmark. Given NEAR’s experience with USN, the objective should not be to maximize headline yield. It should be to earn a real return without taking undue risks with the treasury’s NEAR.

[Entechnologuehamadex]

I really like the proposal, but have one question: Current emissions are split 90% validators, 10% ecosystem treasury, beyond the 30m NEAR going into this fund proposal, would the recurring 10% for the treasury also be put into this fund indefinitely?

[Moh27]

I strongly support this direction—not because it reduces inflation, but because it shifts NEAR toward a fundamentally stronger economic model. Relying on protocol revenue instead of perpetual token emissions aligns incentives for builders, validators, and holders alike. A well-governed sovereign fund can create a sustainable source of funding for security and public goods while preserving long-term value. The key challenge won’t be the idea itself, but transparent governance, prudent risk management, and ensuring the fund generates consistent, real yield. If executed well, this could become one of the most innovative token economic models in the industry.

[haenko]

If inflation is gradually reduced, how will existing NEAR stakers be compensated? Will the Sovereign Fund’s yield replace staking rewards for both validators and stakers, and will participation require delegating through House of Stake?

[Rosalia]

I’d say the proposal is interesting, but its success will depend entirely on governance, transparency, and accountability.

1. The Sovereign Fund should never become another organization whose operating costs exceed the yield it generates. Otherwise, we’re simply creating another expensive bureaucracy. House of Stake already costs roughly $500,000 per year while generating zero revenue. The Sovereign Fund cannot repeat that model.

2. The fund should become the single funding and oversight body for every ecosystem initiative currently financed with protocol funds, including DevHub, Treza, Aurora Labs, NEAR AI, and similar organizations. Every token holder should be able to see exactly how much each project receives every year, what KPIs it has, what it delivers, and whether it generates any measurable value or revenue. Today, none of that is transparent.

3. Revenue generated by independent companies such as Defuse Labs should not be redirected into this fund. Defuse is one of the few companies that has built an actual business, and Alex should continue distancing Defuse from the NEAR Foundation rather than strengthening that association.

4. Governance reform is non-negotiable. The NEAR Foundation has already allocated millions of dollars to projects that ultimately failed or disappeared. It should not retain majority control over a Sovereign Fund through mechanisms such as the Screening Committee, Security Committee, or its voting influence via veNEAR. The organization responsible for previous capital allocation should not have unilateral control over future capital allocation.

5. I completely agree that governance should not be concentrated in one person’s hands. Today, too many important decisions are effectively designed or influenced by the same ONE person, from House of Stake to NEAR Legion events in Africa and many other ecosystem initiatives. The bigger issue is that this governance model has not produced corresponding token growth or ecosystem success despite years of spending. Instead, it has resulted in a long list of expensive initiatives with little accountability and very limited measurable return.

6. Finally, before creating a Sovereign Fund, the community deserves an honest audit of the last five years. Aside from Defuse Labs, it’s difficult to identify a single ecosystem project that has become a sustainable, profitable business. The overwhelming majority of heavily funded projects—HOT Protocol, Open Forest Protocol, Mintbase, Skyward Finance, Auction, and many others—either failed to achieve meaningful adoption, became inactive, or simply disappeared. Before asking the community to trust a new treasury model, we should first understand what happened to the billions of dollars already invested and what lessons have actually been learned.

[nearforce]

I run validator node, so I’ll focus on the part that affects operators directly.

The proposal is well-argued on treasury design, but it quietly changes what a validator is. Today, rewards are algorithmic: I meet the protocol’s requirements, I get paid, and nobody can decide otherwise. Under a fund model, rewards become an allocation — set by governance, sized by yield, and revocable. That’s a shift from permissionless to permissioned, and it deserves to be named explicitly rather than framed as a payout mechanism change.

Three things would make this evaluable:

1. The numbers. A sovereign fund spends its yield, not its principal. So the required capital is simply annual security cost divided by yield rate. Rough order of magnitude — correct me if these figures are off:

• Current emissions: roughly 30M NEAR per year
• At 5% yield, covering that requires a fund of ~600M NEAR
• At 3% yield: ~1B NEAR. At 8%: ~375M NEAR
• The fund starts at 30M NEAR — around 5% coverage at a 5% yield

That gap isn’t a criticism in itself; every endowment starts small. But it means the fund covers a low single-digit percentage of security cost at launch, and the proposal never states the target size, the assumed yield, or the coverage ratio at each milestone. “Gradually reduce inflation” is unfalsifiable without them — and nothing in the design prevents emissions from being cut faster than coverage grows. Publishing that table would turn this from a direction into a plan.

2. The correlated failure case. Emissions are unconditional; yield is not. A fund denominated in $NEAR, generating yield from $NEAR, paying costs incurred in fiat, is reflexive by construction. In a sustained drawdown the fund shrinks, the yield shrinks, and the fiat value of every payout shrinks — all at once, and all for the same reason. Operators don’t fail independently in that scenario; they fail together, because they’re all exposed to the identical variable. Servers get shut down in the same quarter, the validator set thins, and the network’s security degrades precisely when confidence is already weakest. Emissions at least dilute holders instead of removing nodes. Is there a security-budget floor at which emissions automatically resume?

3. The eligibility rules. Who qualifies for support payments, on what published criteria, decided by whom, and with what appeal process? “Core validators” needs a definition before, not after, emissions start being redirected.

[rdp4by]

Why I oppose the “NEAR Sovereign Fund” proposal in its current form

I oppose transferring the protocol treasury into the proposed fund under the framework currently presented. The concept may deserve research, but the current post is a narrative and an analogy—not an investment mandate, an economic model, or an accountable governance structure.

1. Norway and Singapore are an appeal to prestige, not a valid comparison

Invoking Norway and Singapore transfers the reputational halo of successful states to a fundamentally different proposal.

Norway deliberately invests its oil wealth abroad and across more than 7,200 companies, bonds, real estate, currencies and infrastructure. Its asset universe, benchmark, risk limits and management responsibilities are formally defined. Material policy changes require parliamentary approval. Norway’s portfolio, governance model and detailed investment mandate are public. Singapore’s GIC likewise operates under a defined government mandate, professional management and institutional accountability rather than ad hoc token voting. GIC also publishes a description of that governance structure.

The proposed NEAR fund does almost the opposite. It would hold NEAR and deploy NEAR into the same ecosystem whose revenue, collateral quality, liquidity and counterparties are already dependent on NEAR.

That is not diversification. It is concentrated and reflexive exposure.

During a severe bear market, all of the following could deteriorate simultaneously:

• the USD value of the fund;

• protocol revenue;

• demand to borrow NEAR;

• borrower collateral;

• DeFi liquidity;

• counterparty solvency;

• the fund’s ability to pay validators’ largely USD-denominated operating costs.

A more accurate name would be “protocol treasury investment fund” or “protocol endowment.” Calling it a sovereign fund does not give it the safeguards of a sovereign fund.

2. The economic model does not close

The proposal starts with approximately 30 million NEAR and uses a hypothetical 5% lending return.

That produces only:

30M × 5% = 1.5M NEAR per year

After the 2025 halving, maximum inflation is 2.5%, with approximately 90% allocated to validators. Against a circulating supply of roughly 1.303 billion NEAR, that implies a gross validator allocation of approximately:

1.303B × 2.5% × 90% = 29.3M NEAR per year

This is before considering public goods and fund operating expenses. At a 5% return, approximately 586M NEAR—around 45% of today’s circulating supply—would be required merely to match that gross validator allocation.

The relevant inflation parameters were described in the 2025 discussion, while the current circulating supply is approximately 1.303B NEAR.

Moreover, staking rewards are issuance redistributed among holders. They are not external economic revenue capable of replacing that same issuance.

A lending yield is external only when it is paid by solvent borrowers engaged in productive activity. The proposal provides no evidence that there is sustainable demand to borrow millions of NEAR at 5%. A large treasury deployment may simply compress rates. Yield paid through token incentives would be circular rather than real.

Before this can be evaluated, we need:

• historical protocol revenue by source;

• net revenue after partner payments and expenses;

• conservative, base and adverse forecasts;

• expected validator and public-goods expenses;

• return assumptions net of losses and management costs;

• the fund size required at each stage of inflation reduction;

• explicit conditions under which inflation would—or would not—be reduced.

Without these numbers, “eventually funding security” is an aspiration, not a financial plan.

3. NF’s previous capital-allocation record must be audited first

Before creating another investment operation, the community needs a complete retrospective of the capital already deployed by NEAR Foundation.

The publicly identifiable record includes:

• the $800M ecosystem initiative, divided into $350M for Proximity DeFi funding, $250M for ecosystem grants, $100M for startup funds and $100M for regional hubs, according to NF’s 2022 transparency report;

• the Caerus venture fund and lab, announced with a $50M initial closing and a $100M target;

• the NEAR AI Agent Fund, announced as a $20M liquid fund;

• a $40M USN protection grant following USN undercollateralization and double-minting;

• $90M reported as “Loans and Investments” in Q2 2023, compared with $70M reported in early 2024, without a deal-level reconciliation explaining returns, exits, repayments, write-downs or reclassifications.

An honest answer to “what were all NF investments?” is that the public cannot currently know.

Messari attributes 87 investments to NF, while CryptoRank lists 46. Public databases attribute NF participation in funding or accelerator rounds involving at least:

Abound, Almanak, Allstake, Analog, Atlas Protocol, Calimero Network, Covalent, Deepwaters, EmpireDAO, Everclear, GAIB, idOS, Infinex, ITSMYNE, KINO, Legend of Fantasy War, MITH, Mintbase, MoreMarkets/Nuffle Labs, MyCointainer, NearPad, Nevermined, New Order, Octopus Network, Omnilane, Open Forest Protocol, OpenGradient, OrangeDAO, ORO AI, Pond, Predicate, PublicAI, SovereignAI, Stader, SWEAT Economy, Templar Protocol, Virtual Labs, Vita Finance, Vorto and W3Gamez Network.

NF’s own funding overview also names ecosystem vehicles including MetaWeb, MOVE Capital, Stealth Capital, Lyrik Ventures and Caerus, as well as multiple accelerators and delegated grant programs. These categories overlap and public databases do not disclose NF’s cheque size or terms.

Some publicly traded portfolio tokens have performed extremely poorly, but public token-price multiples are not NF’s audited investment return. Therefore, neither “the portfolio was successful” nor “the portfolio was catastrophically loss-making” can be proven from the information available.

That absence of accountability is itself the problem.

Before another 30M NEAR is put at risk, NF should publish a complete, independently audited ledger showing, for every investment, grant, loan and fund commitment:

• recipient and beneficial owners;

• date, instrument and original amount;

• NEAR/USD cost basis;

• current fair value and valuation methodology;

• realized proceeds and cash distributions;

• write-offs and impairments;

• fees paid;

• conflicts of interest;

• realized and unrealized P&L, MOIC and IRR.

The new fund should not rely on the same capital-allocation system until its previous performance has been independently evaluated.

4. House of Stake does not yet have a broad tokenholder mandate

House of Stake currently reports approximately 281 voters and 4.397M NEAR locked. Compared with approximately 1.303B circulating NEAR, that represents only 0.34% of circulating supply. These numbers are shown by House of Stake and the current token supply data.

Participation is also highly concentrated. The House of Stake governance dashboard reports that:

• the top 10 wallets control approximately 85.2% of voting power;

• five delegates are sufficient for a simple majority;

• seven delegates are sufficient for a two-thirds supermajority.

House of Stake may be a useful experiment and venue for its participants, but these figures do not demonstrate a mandate to govern assets belonging to the entire protocol.

The conflict is even more direct because the proposal says that House of Stake delegates may participate in the fund and share its yield. The same group could therefore help approve a structure from which its members expect to receive income.

House of Stake should not be the sole approval mechanism. Any transfer of the protocol treasury should require a separate, high-quorum ratification involving a materially broader share of tokenholders and validators. Prospective recipients of fund yield should be recused from that decision.

5. Paid advocacy and conflicts must be disclosed—not treated as independent community support

There have already been public claims that part of House of Stake participation was generated by an NF-initiated NEAR Legion task. More importantly, Gauntlet’s own analysis found that approximately 83% of locked NEAR came from only 15 large locking events and concluded that incentives alone did not produce meaningful organic locking. The underlying data and discussion are publicly available.

This does not prove that any individual is a bot. Unsupported accusations of botting would weaken legitimate criticism. It does demonstrate why campaign-driven participation cannot automatically be presented as independent community endorsement.

Anyone who has received compensation, employment, grants, contracts or delegated funds during the preceding 24 months from NF, the proposal’s author, NEAR One, House of Stake, a prospective fund manager or a prospective beneficiary should:

1. disclose that relationship prominently;

2. remain free to provide information and arguments;

3. not have their comments represented as independent community support;

4. recuse themselves from binding votes where the relationship creates a material conflict.

House of Stake already has a precedent: in HSP-011, HackHumanity disclosed its NF contract and committed not to vote or to abstain. The same standard should apply universally.

There should also be enforceable rules against compensated undisclosed advocacy, Sybil participation, automated accounts and rewarding people specifically for supporting a proposal.

6. The essential institutional safeguards are missing

The proposal does not yet define:

• who legally owns the assets and who the enforceable beneficiaries are;

• fiduciary duties and liability for losses;

• the investment universe;

• NEAR-denominated and USD-denominated benchmarks;

• maximum drawdown and loss limits;

• limits by strategy, protocol and counterparty;

• leverage, collateral and liquidation restrictions;

• liquidity reserves;

• custody and key-management arrangements;

• manager selection, fees and removal;

• independent risk oversight and financial audits;

• oracle, bridge, stablecoin and smart-contract policies;

• emergency pause, recovery and wind-down procedures;

• treatment of forks or governance capture.

Norway and Singapore are credible because these structures exist—not because they use the words “sovereign fund.”

Conclusion

I oppose transferring the approximately 30M NEAR protocol treasury under this proposal.

A responsible sequence would be:

1. publish an independently audited retrospective of all previous NF capital deployment;

2. publish the fund’s legal structure and Investment Policy Statement;

3. publish a complete economic model and bear-market stress tests;

4. establish conflict-disclosure and recusal rules;

5. obtain broad tokenholder and validator ratification;

6. only then consider a small, capped pilot with an automatic termination date.

No reduction in security issuance should occur until external, non-incentivized revenue has covered the required security budget for a sustained period and continues to do so under severe stress scenarios.

Calling this post a “conversation starter” does not reduce the standard of evidence required before protocol assets are put at risk.

[fiatisabubble]

@illia

• House of Stake delegates can participate through existing delegation mechanisms and share in the yield, as has been proven with past delegate reward programs

Curious to know how would this work. Atm HoS delegations are only for voting power (veNEAR). How does the underlying NEAR get delegated?

[vadim_hom]

Fully behind the direction, fixed supply funded by revenue is the right goal.

One thing worth designing for early, not late. The validator set isn’t one group. Validators who hold NEAR are aligned and will be fine with this, fixed supply stops diluting their own stack too. But a real chunk of the set holds no token at all (not pointing at myself ). For them this proposal is pure downside: their entire revenue is exactly the thing you’re removing, and they have zero upside because they never held the asset.

[Anzus_GemWallet]

From an end-user and wallet perspective, would this proposal change any of the existing staking and delegation mechanics, or only the economics behind them?

If reward sources or calculations change, it would be helpful to have standardized on-chain data or a reliable API that wallets and explorers can use to display expected yield, reward sources, relevant risks, and future parameter changes clearly.

Maintaining the existing user flow while making the new reward model transparent would reduce confusion for holders and delegators.

[Kirkkonen]

Definitely should use the newest shiny smart account and 1Click Earn to distribute funds across multiple supported yield tools and assign treasury managers with limited role access!

[SalTernullo]

SVRN’s Take on the Sovereign Fund

Please note that I am the CEO of SVRN, a public company that holds NEAR on our balance sheet and strives to grow adoption of the NEAR network and product set. We are token holders with a fiduciary duty to our shareholders, and we are also operators who depend on the network staying secure and well capitalized. What follows is my articulation of why we support Illia’s direction towards a sovereign wealth model for NEAR, and preliminary thoughts on the controls it requires to be successful.

Over the past ~18 months the market has rewarded buyback and burn as a short-term mechanic, but I haven’t seen a forward model that tests how it holds up five years out. Illia made the counter-argument in his post and I agree with it: the same value put to productive use keeps supporting public goods, and the base underneath it stays whole.

The precedents cited in the origin post are where I’d start on design. Norway’s fund has compounded through decades and every change of government. Parliament sets the mandate. NBIM manages the money under an investment policy anyone can read, every holding is public, and a fiscal rule caps what the state can take out at the fund’s expected real return, which sits near 3%. That arrangement, where the people setting parameters can’t move the money and the public can check both, has held up under governments that disagreed about a lot.

NEAR has already run a small version of the idea to fund public goods. The Validator Support Program pays long-tail validators a set dollar figure which matches the unit of account in their cost structure. The fund takes the same lesson and generalizes it to the rest of the network’s public goods. Starting it from the treasury the protocol already holds, before revenue or emissions move, is the right size for a first experiment.

SVRN’s support for the live system depends on the domains below being defined before the first milestone, and staying transparent and independently verifiable after it. My team has operated custody and security programs inside regulated financial institutions, experience that has informed how we grouped these:

1. Investment mandate and policy.

2. Custody and key management.

3. Risk framework.

4. Reporting, transparency and verifiability.

5. Public goods funding policy and governance.

6. Accountability and failure modes.

If this moves from concept to practice, we’d also want to look at which revenue streams are in scope at the start. Intents fee-switch flows and NEAR AI inference payments behave differently enough that the answer changes the fund’s volatility profile. The success criteria for each milestone should be well defined before emissions get redirected, plus a stated floor on economic security while inflation steps down and validators migrate to the new payout model. The last one is where yield comes from in the early phase, since the acceptable counterparty classes end up driving most of the risk framework above.

We’ll engage through House of Stake, and if a controls workstream comes out of this discussion we will happily contribute and offer to help to lead it.

[nathanx.near]

Would this fund only manage exposure to assets or would acquiring hard assets like GPUs or land also be on the table?

In the spirit of a true wealth fund mirrored on Norway or Singapore I believe a fund of this nature has a mission to guarantee access to resources like compute if near is going to be successful in the future

[Mayor_of_Pumpopolis]

First of all, thank you Illia for taking the time to engage with the community here on the forum. This is a positive step.

Based on my experiences in the ecosystem and pure reasoning from first principles, I cannot support this proposal.

The hazard of DAOcrats voting themselves funds is the biggest issue. The incentives for abuse are proportional to the size of the fund. Other posters have raised legitimate concerns around the nature of the voting system. I agree with this, but it doesn’t go far enough.

Voting is not a meritocratic or market based system. Malign incentives are baked in. Nobody should be surprised by the outcomes we have seen. Instead of taking a step back and examining these premises, we see the foundation doubling down with more DAOs. Worse yet, this proposal offers additional funds to be managed by HoS or future DAOs.

Even if we believe that DAO governance is a necessary evil, the scope and potential for abuse should be minimized.

The counter proposal is simple:

Trustlessly burn the buybacks. Set emissions as less than the gas burns and buybacks. This should be managed programmatically. A rolling 10-day average of burns would be one way to approach this.

This puts the base NEAR token on a deflationary path. The hazards from insider abuse are removed. Stakers and validators are paid in an appreciating token. Increasing valuations create a natural incentive for holders and liquidity pools.

However, synthesis is still possible. The fund could be used for lending, if the principal and yield were permanently locked. This allows the potential for yield, but removes the natural hazard of insider abuse.

@illia

. If that 1% were simply burned, then everyone in the ecosystem got 1% wealthier in theory, but the effect is negligible given the overall volatility of that asset.

If reducing inflation were negligible, then it would have been pointless to cut staking rewards. Going back to first principles, we have seen stakers, validators and even app developers squeezed. Austerity for everyone else, except the politically connected classes. This is exactly what we would expect to observe from a cartelized ecosystem.

@rdp4by

Messari attributes 87 investments to NF, while CryptoRank lists 46. Public databases attribute NF participation in funding or accelerator rounds involving at least:

Abound, Almanak, Allstake, Analog, Atlas Protocol, Calimero Network, Covalent, Deepwaters, EmpireDAO, Everclear, GAIB, idOS, Infinex, ITSMYNE, KINO, Legend of Fantasy War, MITH, Mintbase, MoreMarkets/Nuffle Labs, MyCointainer, NearPad, Nevermined, New Order, Octopus Network, Omnilane, Open Forest Protocol, OpenGradient, OrangeDAO, ORO AI, Pond, Predicate, PublicAI, SovereignAI, Stader, SWEAT Economy, Templar Protocol, Virtual Labs, Vita Finance, Vorto and W3Gamez Network.

The above list is not exhaustive. There are other failed allocations which come to mind immediately, such as Cosmose/KAKAI’s “AI powered lockscreens”. Before someone objects by claiming this is only for “public goods”, we can reasonably expect eaters to frame their future banquets as “public goods”.

The real costs of misallocation exceed mere token dumps or the amounts spent. By funding projects which have not demonstrated a preference for actual building, second order effects emerge.

• Attention is limited in an ecosystem. Visibility for non-cartel projects is diminished.
• End user burnout. When these projects rug or even fail to launch, users become disillusioned.
• Builder burnout. When builders see that political favoritism dominates the ecosystem, they choose to build elsewhere or not at all.
• The opportunity to measure which projects can survive in a natural market is removed.
• Overall project failure rates increase as performance incentives are stripped away.

The problem is treating burning/deflation as an isolated “price pump” rather than a system-wide signal.

Burn mechanisms don’t exist to engineer short-term volatility. They remove the hazard of abuse. A predictable, trustless baseline levels the playing field, rather than handing arbitrary subsidies to a favored few. Capital misallocation isn’t neutral. It actively penalizes productive builders to subsidize the politically connected.

Deflation, no matter how slight, is a meaningful distinction from inflation.

• It attracts holders and builds trust.
• Stakers and validators are paid in an appreciating token. True yield is greater than the nominal rate.
• NEAR becomes more attractive as a base pair on AMMs.
• Increased holding creates a flywheel effect on price action, which compounds the above points.
• Everyone wants, “number go up”. Highly popular.
• Purely market-driven.

Those who would lose the ability to vote themselves funds will naturally find this unpalatable. Scrutinize their pushback accordingly.

[vinibarbosa]

This is a fully handwritten comment.

Intro

I’ve spent the last 3 days thinking about this proposal and have read it a few times to fully digest it. This is probably one of the most important discussions for the NEAR Network and the House of Stake (or NEAR’s governance in general) and it must be approached with the proportional level of seriousness and thoughtfulness it deserves.

I believe Illia accomplished that, as the proposer, and a few other commentators accomplished the same thing.

Overall, I like the vision and I support the proposed “first phase (…) to kick off the fund an begin the experiment,” but with some reservations.

1. What I agree with

1A. Establishing NEAR Sovereign Fund as described in phase one

a treasury managed under governance-set parameters and designed to generate $NEAR-denominated yield (…)

This is a good first step into making NEAR governance more decentralized, considering the NF currently manages theses funds and it has been the target of many criticisms (which I don’t even agree with in most cases, I believe the NF is doing a great job, overall, but they do exist).

Despite of what I think regarding the NF (it’s doing great) a move towards more decentralization is a correct move as the ecosystem matures and leaves what Illia described as the bootstrapping phase (I agree with this definition).

I also like the idea of being smart about making this fund productive within the ecosystem, generating yield, and redirecting the yield to the ecosystem and NEAR public goods.

1B. Reducing inflation

Reducing NEAR-denominated inflation is good. We did a great first step in October 2025 reducing inflation from 5% to 2.5%. I believe there is still room for more reductions, but I do not (yet) support a full reduction to 0% and a full dependency on the proposed Sovereign Fund.

In short: I believe that running a validator and supporting the network should be a fully permissionless and self-sustainable activity and not a business model by its own.

Many protocols in crypto have been overpaying for security. Yield farmers have joined these networks not to support, but to extract, and this has delayed real adoption and growth by years already.

Reducing inflation to the point it is still able to make the network self-sustainable but not attractive to extrators is the right move that will bring many benefits in the long run (including price appreciation).

Holder’s wealthy is not measured by inflation alone, but by how much of this inflation leaves or stays in the ecosystem.

Moreover, inflation reduction can (and should) follow $NEAR increase in purchasing power.

As inflation is NEAR-denominated, the NEAR-denominated self-sustainable-threshold is inversely proportional to $NEAR purchasing power increase (price appreciation against the USD).

The more we can buy with 1 NEAR (including a VPS rental), the less NEAR we need to sustain the network’s security.

I would support inflation reduction based on NEAR/USD exchange rate averages (similarly to what SVRN proposed for the MPC network powering Intents and Chain Signatures).

I also agree with the sovereign fund helping bootstrapping smaller nodes for a limited time util they can acquire enough delegations to cross the self-sustained threshold, but not as an eternal dependency. We will talk about it more in depth now.

2. What I disagree with

2A. Inflation to zero, full Sovereign Fund-dependency

I do not support moving inflation to zero and making it fully dependent on the Sovereign Fund (not in the current scope, but still worth mentioning my long-term positioning for documentation, as Illia mentioned it in the OP).

As I said before, I believe the network should be self-sustainable and not rely on governance-based incentives.

Doing that would completely shift the security model and the intrinsic incentives of the network: moving from a code-based permissionless system, to a politcs-based permissioned system.

Right now, anyone can set up a node, get enough delegations (even from themselves alone), and become a NEAR validator. This is what makes NEAR system truly decentralized, credibly neutral, and secure.

Despite of decentralized governance (DAOs) having many advantages against centralized governance, they are still not flawless and there will always be a certain level of politics and conflicting interests involved when there is active governance. These things inevitably mess with the incentives and may attract skilled politicians and expose the network to corruption or other governance-driven attacks.

Supporting the network becomes less programmatic and more politic.

The Sovereign Fund can be used for many good things, but this thing (network security), in particular, should remain as code-based (protocol-based) and neutral as possible, because without a solid and secure network foundation, nothing else makes sense.

This is it for now.

Thanks Illia for starting this discussion and for everyone else joining it in good faith. We are just getting started!

Excited about the future for NEAR.

Best,
Vini B

[yadirab]

I am fully behind this direction. The sovereign fund is the right shape and aligns well with NEAR’s vision of a user-owned future. The argument for a fund over burning is favorable: burning distributes a one-time gain, whereas a fund compounds it over time. Better economics and a strong statement about its future horizon, which is the most under-priced thing in this market.

My feedback focuses on scope rather than mechanism. The yield strategy and the inflation glidepath can be tuned by governance over years. The taxonomy cannot: what the charter defines as a public good gets written early on, and will either set itself up for success or failure. That makes it a critical decision in this proposal.

Right now, the proposal names the Validator Support Program, MPC providers, and “other services.” While I support funding these, this list reflects a narrow definition of public goods as infrastructure the network cannot run without. We should consider all the categories of public good a user-owned, sovereign future requires, not just protocol requirements.

There are two main reasons to address this now:

1. Precedent. Sovereign funds and endowments do not just fund machinery. Norway’s fund publishes every holding and every voting record, because a fund citizens do not understand does not survive politically for 36 years. Similarly, university endowments fund libraries and lectures alongside buildings. The civic layer is essential to making the principal defensible.
2. Measurement bias. Taxonomies naturally drift toward what is easy to quantify. Optimism’s early RetroPGF rounds weighted education equally with infrastructure. By Round 3, the categories had been restructured, and education lost its dedicated line. It did not become less important; it just stopped being a named category, and categories are what get budgeted. Thus, less funding for an undefined category.

Regarding NEAR specifically, the gap against ETH and SOL is not shipping quality - never has been - but rather narrative anchoring. Security spend protects the asset and comprehension spend creates holders who do not sell during a drawdown. Both are demand-side infrastructure, but only security is currently in scope.

Furthermore, the knowledge of individuals who have navigated NEAR’s cycles should compound as a common resource rather than sit in silos. We also keep meeting the industry’s hack-and-exploit news cycle reactively, one incident at a time. A funded practice of documenting and teaching openly across validators, Intents, near(.)com, and AI would show the user-owned future being built, rather than just asserting it.

On funding philosophy, we should treat security and MPC as a utility bill: cover it reliably and keep it straightforward. The more important question is how the surplus is used, as this will determine whether the fund compounds into a movement or simply keeps the lights on.

Therefore, my ask is to broaden the definition early on. Name the full range of public goods a sovereign future needs, then let House of Stake weigh them via voting.

[Martin.H]

Introduction

Great to see some very intelligent feedback here and the NEAR leadership seriously thinking about NEAR economics. Also the recent changes to economics - the issuance reduction, NEAR Intents revenues being taken out of circulation, and staking NEAR as a form of payment for AI services – are all spot on in the right direction.

As for this proposal, in my view it has the right objectives and it is a good starting point for a discussion.

The two main objectives seem to be:

• To stop inflation by ultimately stopping issuance at some point

• To secure long-term funding for NEAR ecosystem security and development by establishing Sovereign Fund (SF)

I assume the main difference between the current state with Protocol Treasury and the new SF would be that

• Instead of taking revenue out of circulation, it would be sent to SF.

• Instead of NEAR sitting idly in Protocol Treasury, some high yield strategies would be used.

While I agree with the main objectives, I have some serious objections regarding the actual implementation. Please rest assured that even though some my comments may sound critical or harsh, I am overall very supportive of the NEAR project and I welcome this discussion. According to my current assessment NEAR is one of very few public blockchains that can actually survive long-term, provide real utility, and achieve economic sustainability.

My Objections

Burn is essential

I will use the term “Burn” to refer to removing NEAR permanently from circulation regardless of how technically or legally it is implemented.

There is a sound theoretical basis and empirical data that strongly suggest that burn is essential for long-term price appreciation.

As for the theory, there is a basic economic law of supply and demand. One aspect of NEAR is to act as a commodity, a fuel within the NEAR network. So at least partially, price of NEAR is determined by supply and demand laws that affect the commodity markets. As long as “structural supply > structural demand” the price is destined to go down over the long term (I mean years, decades). Structural supply is the issuance and structural demand is the burn plus the part of the fees that does not get dumped back on the market. So burn is obviously a decisive part of the equation. There is also speculative and investment demand/supply, but these are just waves (sometimes huge waves) on the long-term supply-demand driven curve.

As for the empirical evidence: In February 2025 Solana abandoned burning 50% of priority fees. Looking at the price chart of BNB, TRX and SOL it is clear that the correlation changed since February 2025. In my view Solana is technologically superior network to BNB and TRX, yet since February 2025 the price of SOL started dramatically underperforming both TRX and BNB that consistently maintained deflationary policy. Solana community probably realized the problem and (fortunately for SOL) are now proposing to implement more burn again increasing it approximately 10x.

The same dynamics can be observed when Ethereum drastically reduced fees and burn, and became inflationary again. Since 5th August 2021 to 13th March 2024 when Ethereum was deflationary it underperformed TRX and BNB just around 30% for the whole period of almost 3 years. Since it become inflationary it underperformed TRX 400% and BNB 100% in approximately 2 years. The “supply > demand” imbalance is no joke.

Also look at Avalanche which is arguably one of the more interesting projects in the industry with good tech and many real world real deal use cases and used by some big players. Unfortunately (for AVAX) they barely charge any fees and just let people create subnets for close to free, so the “supply > demand” imbalance is so huge that AVAX is not even in top 20.

Finally, we can look at NEAR itself. It was suffering for a long time from this same imbalance. But since the issuance reduction and NEAR Intents burn introduction, NEAR became a project with one of the lowest “supply > demand” imbalances in the industry. Not surprisingly, NEAR price started showing some strength.

If, instead of burn, revenue just gets redistributed by SF to projects and validators who sell it on the market to fund their operations, it does not help to reduce this imbalance. As long as there is issuance, burn is absolutely the key, the only pure indisputable organic recurring demand that balances out the issuance. Burn can be stopped only after issuance stops. And issuance can stop only after revenues comfortably cover network security, when “Revenues > Issuance”.

Norway and Singapore is not even close to comparable

Firstly, SF of countries such as Norway, Singapore or Gulf states are possible because these countries run a systemic surplus. That is why USA or Japan who are financed through “issuance” do not have one. Establishing NEAR SF definitely makes sense but only after there is some surplus to invest. And that will be achieved only when “Net Issuance <= 0”. Please note that revenue is not surplus. Revenue becomes surplus only when “Net Issuance <= 0”. In other words, as long as the native staking yield and network security is partially subsidized by issuance, NEAR ecosystem is running on deficit, and financing SF from deficit is imprudent.

Secondly, SF are globally diversified and conservative. Investing NEAR tokens in high yield strategies on NEAR blockchain is the exact opposite: concentrated and high-risk. It does not solve the cyclicality problem that the proposal intends to solve. It may make the problem even worse. It is like Norway investing all its surplus natural gas revenues into leveraged natural gas futures.

Predictability and stability of economic model is critical

BTC success can be at least partially attributed to never touching its economic formula.

In case of rapidly developing blockchain such as NEAR, changes are inevitable, but they should be gradual and ideally not “take away” anything from any group of network participants.

Recent introduction of NEAR Intents revenue burn is an excellent example of a change that benefits all and does not “take away” from anybody. I sense however, that this SF proposal is going in the direction towards abandoning this burn and directing the revenue into SF.

I strongly suggest NEVER to ignite even the slightest spark of doubt or suspicion in the market, that the revenue taken out permanently from circulation by NEAR Intents, may enter the market at some point. It would be an immediate institutional SELL signal, and all the progress on NEAR economics made in recent months would evaporate in that instant. It would completely destroy reputation of NEAR leadership by supposed “burn” becoming part of circulating supply again. And the system would revert back into the tragic “supply > demand” imbalance it was suffering from before the recent changes.

From a validator perspective, changing from an algorithmic predictable income to a subsidy distributions from SF at the discretion of SF managers, may seem both unnecessarily complicated and less certain. I totally agree that issuance should be reduced and ultimately stopped, but only after there is enough revenue to compensate for it. And the distribution should be fully algorithmic and directly to validators, so that the validators do not even notice any change from the current model; definitely not subject to SF discretionary redistribution decisions and political discussions. If the idea is that SF would help validators manage cyclicality, saving the validators in market downturns, and taking away some of their income when the markets are hot, I would suggest to leave this to validators. If I was a validator, especially if I already survived 5 years, I would prefer to do my own risk and cycle management, rather than delegating it mandatorily to SF investment manager whom I do not know and have almost no control of.

Unjustified Extra Risk and Dilution of Attention and Resources

There already is NEAR Foundation Treasury (FT) and Protocol Treasury (PT) in addition to which a new entity, SF, would be created.

I assume the idea is that NT would

• Stake NEAR natively

• Hold certain amount of assets in government bonds to be able to provide funding during marker down-turns. This allocation is hopefully subject to very clear systematic rules.

• Possibly use very conservative covered options. Selling calls on NEAR that is planned to be sold anyway at certain price to fund projects or to rebalance NEAR/Fiat holdings. Selling puts on NEAR that is planned to be bought anyway at certain price to rebalance NEAR/Fiat allocation.

• Deploy capital into financing start-up projects withing NEAR ecosystem, network security, and NEAR ecosystem development in general.

And the new SF would actively manage assets by investing in higher-risk yield strategies within NEAR ecosystem.

High-yield strategies investment manager is different kind of role with different focus. mindset and expertise than what NT is currently doing. At this stage, when the ecosystem is still on issuance subsidies and resources are scarce, I would recommend using all the available resources for the highest impact activities, focusing on evaluation, coming up with, or seeding ideas like NEAR Intents or AI agents that will perform millions of transactions with real world usage. Spending resources and attention on yield investment managers at this stage would distract and dilute attention and resources from these high-impact activities.

Target 5% yield was mentioned. Currently native yield is around 4.63%. If the 5% was risk free and guaranteed (which it is not), there would be extra 0.37% income above native yield. If the fund had 30M NEAR assets it is NEAR 111K extra income annually. I doubt this would cover even the SF management expenses.

From the perspective of NEAR token holders, if instead of staking NEAR natively, SF starts using an investment manager to invest in high-yield strategies, then the NEAR ecosystem financing will be exposed to additional risks:

• market risk from high yield strategies

• contract risk (What was the recent exploit? Rhea Finance?)

• investment manager discretion risk

• conflict of interest and political risk

Exposing NEAR ecosystem funding to these extra risks for the sake of slightly higher additional yield may make sense only if:

• There is a surplus income (Net Issuance < 0) so that mandatory security costs are safely covered.

• The surplus income is significant enough so that the potential extra yield comfortably covers extra management and administration costs.

Alternative Proposal

What to do with protocol revenue

I sense that one problem the proposal is trying to solve, is that there is increasing amount of accumulated NEAR Intents revenue taken from circulation, sitting around doing nothing, except for presenting a huge temptation.

A solution that I propose is to

• Stake revenues natively and automatically within Protocol Treasury

• Algorithmically ensure at code level that NEVER under no circumstances the principal will be spent. Only the yield. The amount originally staked can never be unstaked or taken out.

This would achieve several objectives:

• Keeping the revenues forever natively staked is equivalent to burning them and reduces the “supply > demand” imbalance just as burn would do.

• The pressure to do something with the NEAR that is idly sitting around would disappear.

• There would be some funds available from the yield to support NEAR ecosystem.

• The uncertainty of what will happen with this idle NEAR would be systematically solved and cleared forever.

• There would be no extra market risk, contract risk, conflict of interest risk, investment manager discretion risk.

In my opinion this could be a compromise acceptable to all and long-term sustainable.

Establishing and funding SF

SF could be established and funded by the native staking yield from the staked revenues. Even though this yield is not strictly an ecosystem surplus, it is something that was not there before, so psychologically most stakeholders, me included, would probably accept investing this yield in high-yield strategies and exposing it to extra risks.

The question is whether it makes sense investing resources and attention into establishing SF at this stage, when this yield that would fund it is still very small. I am not in principle opposed to it, but cost estimation and budget is definitely needed.

One possible solution could be to establish the SF now so that the structure is ready and can start receiving and accumulating funding from the yield generated by natively staked revenues. But initially, SF would just automatically natively stake the yield so there would be no extra management cost. Investment manager could be hired to invest in high-yield strategies once the size of the assets under management would make it economically justifiable.

Alternatively, the management could be outsourced to third party which would be compensated by a commission that would be a percentage of the extra yield earned above the native yield.

Fixed supply and stopping issuance

I agree that NEAR ecosystem has moved from a bootstrapping phase, but it has not yet reached a surplus phase. It is in a decisive interim phase, where token unlocks stopped, but issuance still continues and subsidizes network security. At this stage all attention and resources should be directed towards increasing revenues so that we get to the surplus phase when “Revenues > Issuance”. Because of SVRN, which is a listed company with the objective to accumulate 10% of NEAR supply, the NEAR ecosystem effectively has at least four years to reach the surplus phase. During these four years, the “Supply > Demand” imbalance is fully solved by SVRN purchases. If issuance is 2.5% p.a. and SVRN buys 10%, it fully absorbs four years supply.

When “Revenues > Issuance” then issuance can be stopped, supply fixed and network security and ecosystem development completely financed by revenues + yield on NEAR natively staked by Protocol Treasury + yield earned by SF. Stopping issuance solves the “Supply > Demand” imbalance forever, and does it in a definite way that is transparent and obvious to all market participants.

Before the surplus phase until “Revenues > Issuance” is reached, issuance should not be stopped completely, but it can be reduced gradually and slightly:

• When the costs of running a validator demonstrably and significantly drop due to technical improvements of the blockchain, and when these cost-savings can be proved and calculated.

• When revenue is consistently generated, part of the revenue can be directed towards financing network security, accompanied by corresponding issuance reduction. For example, if NEAR Intents revenue generate between 5000-15000 NEAR per day, than a fixed conservative amount of 2500 NEAR per day from revenues could be used to finance network security, and in the same time issuance reduced by 2500 NEAR per day. If revenue is used to finance validators, in my opinion it should be sent to validators directly, and not via SF. Why expose validator income to extra complexity and risks by sending the revenues first to SF, and SF then managing it and redistributing it? Financing of security (validators) is a mandatory expenditure. It should be predictable and not subject to speculation so it should not be exposed to risks of high-yield discretionary investment strategies.

Conclusion

I support the objectives of achieving fixed supply and establishing a Sovereign Fund with the following reservations:

• Fund the SF only from native staking yield generated from natively staked revenues. Never put into SF or back into circulation NEAR Intents revenue. And do not expose to additional risks (market, contract, political and investment manager risk) the principal.

• Aim for fixed supply by reducing issuance gradually when it can be justified by material cost-savings due to technological improvements or offset by income from revenues. Stop issuance completely only when revenue is comfortably and sustainably higher than issuance.

• If issuance is reduced and compensated by revenues, send the revenue to validators directly and algorithmically and not discretionarily through SF.

[Axia]

Thanks @illia for starting this discussion. I’m directionally supportive of exploring a NEAR Sovereign Fund.

The strongest part of the idea is shifting NEAR from a purely inflation-funded model toward a more durable capital base that can support security and public goods over time. If NEAR is generating protocol revenue, it makes sense to explore whether some of that value should be compounded rather than immediately burned or spent.

That said, the design questions are important. I’d want to better understand:

• what the fund’s benchmark would be;
• which strategies would be in scope;
• how validator security would be protected if rewards gradually shift from issuance to fund yield;
• who would manage risk and what limits would apply;
• what counts as a public good;
• how performance, holdings, and decisions would be reported.

I’d also be cautious about treating burn and a sovereign fund as mutually exclusive. Burning is simple and credibly neutral. A fund can compound capital and support public goods. The right design may use both.

—Rika