Who is the NEAR Economics and Security Working Group?
We are a group of endorsed delegates with the mission to steward communication between the NEAR community, relevant stakeholders, and Gauntlet — focusing on the implications of a potential reduction of validator issuance on decentralization and validator sustainability.
Background
As part of our ongoing work (and as mentioned in our last update), the Economics and Security Working Group hosted a Q&A session with Gauntlet to deepen our understanding of the HoS proposals (1.0 & 2.0).
Our aim was to clarify open questions and identify opportunities where this working group can contribute.
Key Discussion Highlights
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HoS rollout & governance
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HoS 1.0 focuses on veNEAR governance and may not include on-chain execution.
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On-chain governance of parameters is expected in HoS 2.0, though clarity is needed from the NEAR Foundation.
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Gauntlet plans to post updates to the forum to ensure visibility before 2.0 is finalized.
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Inflation, APY, and validator rewards
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Inflation reduction is correlated with staking APY. While APY may decrease, emissions cuts could increase NEAR’s buying power.
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A validator incentive program is under consideration, particularly to support small validators once emissions changes are in place.
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Small validator sustainability
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Supporting small validators was a recurring theme. HoS 2.0 aims to expand validator slots (from ~297 to 300–400) and ensure that smaller validators can grow.
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The Working Group was encouraged to take a role in surfacing validator pain points and proposing solutions around validator support.
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Liquid Staking Tokens (LSTs)
- Inflation reduction could negatively affect LST competitiveness, but Gauntlet stressed that DeFi integrations and utility (LP fees, leverage) can offset this.
Takeaways
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HoS 2.0 is where key validator economics decisions will be made (staking rewards, on-chain parameter changes, validator incentives).
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Validator sustainability — especially for smaller operators — remains a top priority and an open design challenge.
Next Steps
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Continue engaging with Gauntlet on 2.0 design.
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Meet with The Foundation to align on priorities for this WG —which may include designing support programs for smaller validators, collecting feedback from validators and LST stakeholders, and drafting solutions.
Working Group Outputs
NEAR Economics & Security WG Update: September 3rd
NEAR Economics & Security WG Update: Token Issuance Survey Update