NEAR Protocols House of Stake has approved a proposal to lower the networks maximum annual NEAR issuance rate from 2.5% to 1.6% over two years, setting up a gradual reduction in new token creation that could reshape staking returns and long-term supply growth.
The measure, HSP-029, passed on Monday but has not yet changed NEARs token economics. It must first receive Security Council review, complete a 90-day grace period, and be activated through a validator software upgrade before the new issuance ceiling becomes binding.
Under the plans proposed schedule, the issuance cap would fall by roughly 3.75 basis points each month, declining linearly from the current 2.5% annual maximum to 1.6% at the end of month 24. The proposal leaves the distribution of newly issued tokens unchanged: 90% would continue going to staking participants and 10% to the protocol treasury.
A lower ceiling, not a new emissions system
HSP-029 changes the maximum amount of NEAR that can be issued annually rather than replacing the networks emissions framework. The proposals authors framed the adjustment as a response to a network that no longer requires the same level of token incentives used during its earlier growth phase.
The documentation argues that NEARs active validator set is already oversubscribed, meaning more validators seek to participate than the protocol currently needs. In that context, the proposal describes the existing issuance rate as a continuing transfer of value from holders who do not stake to those who do, while increasing the number of tokens entering circulation.
Reducing issuance would slow that transfer without eliminating staking rewards. The 90/10 allocation would remain in place, preserving the treasurys share of emissions and keeping staking as the main destination for newly created NEAR. The change instead reduces the size of the annual pool being distributed.
According to the HSP-029 documentation, the planned two-year reduction would avoid approximately 11.8 million NEAR in issuance compared with maintaining a 2.5% annual ceiling throughout the period. Over six years, the proposal estimates 66.1 million fewer NEAR would be created than under the old cap.
Those figures would leave total supply about 4.36% lower after six years than it would be if the 2.5% maximum were retained, according to the proposal. At the end of the rollout, projected daily issuance would decline from about 89,500 NEAR to roughly 57,300 NEAR.
Staking rewards would fall alongside emissions
The trade-off for lower dilution is a lower gross return for staking participants, assuming the proportion of NEAR being staked does not materially change. Based on the staking participation rate measured in September, the proposal projects gross staking yield would decline from 5.268% to 3.372% over the 24-month rollout.
That estimate is sensitive to staking participation. If a smaller share of NEAR is staked, rewards per staked token could be higher than the projection; if participation rises, individual yield could fall further. The proposal does not alter the reward split itself, so those changes would stem from the smaller issuance pool and shifts in the amount of NEAR committed to staking.
For delegators and validators, the transition creates a more direct economic calculation. Lower gross rewards may make staking less attractive for participants focused chiefly on yield, while reduced issuance may appeal to holders concerned about supply expansion. Validators also face business-model implications if less token issuance reduces the aggregate rewards available to cover infrastructure, operations, and delegation incentives.
The proposals gradual schedule appears designed to avoid an abrupt reward shock. Rather than cutting the cap immediately, the monthly reductions would give validators and delegators two years to adjust their expectations and operational plans.
NEAR has already cut issuance once
The latest proposal follows NEAR Protocols previous reduction in maximum issuance, from 5% to 2.5% in October 2025. HSP-029 would extend that direction by lowering the ceiling another 0.9 percentage points from the current level.
The two changes reflect a common issue for established proof-of-stake networks: early token emissions can help attract validators and secure a network, but the same level of issuance can become harder to justify when validator participation is strong and token rewards increasingly resemble a recurring dilution cost for non-stakers.
NEARs governance process also places limits on how quickly the House of Stake vote can affect the protocol. Security Council review and the 90-day grace period mean validators and token holders retain time to examine the implementation before the revised cap is enforced. A validator protocol upgrade is also necessary, making adoption by the entities running the network part of the final path to activation.
Supply policy moves toward a lower-reward model
If HSP-029 reaches implementation, NEAR would operate with a lower long-term issuance ceiling while retaining its existing staking and treasury allocation formula. The network would issue fewer tokens each day once the full reduction takes effect, but participants would not see the change immediately because the cap would descend over 24 months.
The outcome will depend partly on whether staking participation remains near the level used in the proposals model. A stable staking ratio would make the projected decline in gross yield more likely, while meaningful changes in delegation behavior could alter actual returns.
For now, the House of Stake vote signals support for a more restrictive issuance policy rather than a redesign of NEARs economic structure. The remaining governance and technical steps will determine whether the proposed reduction becomes a live protocol rule.
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