NEAR Cuts Issuance to 1.6%, but the Token Drops 7%

The Near Protocol community approved proposal HSP-029, which gradually lowers the maximum annual issuance of NEAR from 2.5% to 1.6% over 24 months. The token slipped about 7% on the day, to $3.82 according to CoinMarketCap.

By Cointelegraph's count, the change would keep 11.8 million NEAR from entering circulation over two years. At the current price that is about $45 million.

99.9% voted in favor, and the price still fell

On Monday an overwhelming majority backed HSP-029: 99.9% of the voting power that took part. The NEAR House of Stake governance platform recorded about 3.28 million veNEAR tokens cast in favor. These are tokens locked for a set period in order to vote.

On Tuesday at 11:06 UTC NEAR traded at $3.82. The weekly decline reached roughly 13%. The source does not tie the price move to the vote itself, so we do not know the cause. For comparison, Bitcoin held near $77,700 that day, and Ethereum cost about $2,300.

The issuance cap drops by 0.9 percentage points

Today the protocol can issue up to 2.5% of new tokens a year. The proposal lowers the ceiling to 1.6%, though not at once. The move is spread over 24 months, so annual issuance will fall step by step.

The 0.9 percentage point gap equals 36% of the current cap. That cuts the pace at which existing holders get diluted by more than a third.

Staker income shrinks from 5.2% to 3.3%

Lower issuance means smaller rewards for those who keep tokens staked. By the proposal's estimate, gross staking yield falls from 5.2% to 3.3% by the end of the 24-month period. The loss is 1.9 points, or about 36% of the current level.

The two figures line up: issuance and yield shrink by roughly the same share. That makes sense, since validator and staker rewards are paid from newly issued tokens.

11.8 million NEAR over two years and 66.1 million over six

The authors estimate that 11.8 million NEAR will stay out of circulation over two years and 66.1 million over six. At the current price the second figure equals about $250 million (our calculation using $3.82).

Another 14 days for a veto and 90 days of waiting

A vote does not mean the change takes effect tomorrow. The Security Council can block the proposal within 14 days. If there is no veto, it gets ratified.

• After ratification a 90-day grace period applies, and only then does issuance start to fall.
• Validators must install a technical upgrade, and without it the change will not work.
• Counting from the Nov. 2 vote, the earliest start is roughly mid-February 2027 (our calculation).

What comes next for the token

The market has answered with a drop so far, even though the proposal plays out over years. Staker income falls by 1.9 points only by the end of the 24-month period, so a sharp exit from staking is unlikely sooner. After that, everything depends on the Security Council's veto window and on validators being ready for the upgrade.