Somewhere in NEAR’s validator network, an operator could be responsible for tens of thousands of tokens while owning barely enough NEAR to buy dinner.
That’s not an exaggeration pulled from a hypothetical worst-case scenario.
In a September snapshot covering 163 smaller validator pools, the median operator had just 19 NEAR of their own staked against roughly 40,130 NEAR in delegated stake.
At the snapshot’s $4.30 token price, those 19 NEAR were worth less than $82.
The rest belonged to people trusting that operator to help keep the network running.
Now imagine telling that operator the network wants to reduce the rewards that support their business by roughly 36%.
On November 2, NEAR’s House of Stake voted overwhelmingly in favor of doing something close to that.
The proposal, HSP-029, would gradually reduce NEAR’s maximum annual token issuance from 2.5% to 1.6% over 24 months. Its supporters estimate the change could prevent 66.1 million additional NEAR from entering circulation over six years.
For investors worried about inflation, the appeal is obvious. Fewer new tokens mean slower dilution of existing holdings.
But blockchains don’t operate on scarcity alone.
Someone still needs to run the machines.
And buried inside the proposal’s economic modeling is a calculation that makes the trade-off considerably less comfortable: 24 validators would lose their modeled ability to cover operating costs at the target issuance rate.
The question isn’t whether NEAR can create a more attractive supply schedule.
It’s whether the network can afford what that schedule takes away.
The 66 Million Tokens That Won’t Exist
NEAR has already been through one major monetary experiment.
In October 2025, the network reduced its maximum annual issuance from 5% to 2.5%, effectively halving the rate at which it created new tokens.
The argument was familiar across crypto: an established blockchain should not keep issuing tokens at the same pace it needed during its early years.
NEAR had grown. Its infrastructure had matured. Its validator network no longer needed the same economic incentives to attract participants.
A year later, that argument returned.
This time, the proposed destination was 1.6%.
The official HSP-029 proposal, authored by Sal Ternullo, CEO of publicly traded NEAR treasury company SVRN, makes a relatively simple adjustment.
Maximum issuance would decline gradually by about 0.0375 percentage points per month, reaching 1.6% after two years.
The allocation of newly issued tokens would remain unchanged: 90% for staking participants and 10% for the protocol treasury.
No new monetary mechanism. No discretionary investment manager. No new distribution program.
Just fewer tokens.
According to the proposal’s calculations, the change would avoid 11.8 million NEAR in issuance during the first two years and 66.1 million over six years, compared with keeping the 2.5% ceiling indefinitely.
That would leave the projected supply 4.36% smaller after six years.
Using the proposal’s September 22 reference price of $4.30, those 66.1 million tokens carry a nominal value of roughly $284 million.
But that figure deserves a little skepticism.
NEAR isn’t saving $284 million in cash. It isn’t buying back $284 million worth of tokens or removing that value from circulating supply.
Those tokens simply wouldn’t be created under the proposed schedule.
Their hypothetical dollar value depends on a historical price. Whether the smaller supply translates into greater market value depends on future demand.
And the new tokens that disappear from the supply forecast also disappear from somewhere else.
Validator rewards and treasury inflows.
Using the proposal’s 90/10 allocation, Ravel calculates that the 66.1 million tokens of avoided issuance would correspond, before adjustments for fee burns and other differences, to roughly 59.49 million fewer NEAR allocated to staking participants and 6.61 million fewer NEAR allocated to the treasury over six years.
That’s the other side of the scarcity equation.
Every token the network stops issuing is also a token it no longer distributes through its existing reward system.
For holders who never stake, reducing dilution can be attractive. For people whose income depends on staking rewards, the trade looks different.
The Validator Math Has an Uncomfortable Detail
The proposal estimates that gross staking yield would decline from 5.268% to 3.372% by the time the new issuance ceiling reaches 1.6%.
That’s a reduction of roughly 36% in the modeled yield.
The projection assumes the same 42.71% staking participation rate recorded on September 22. Real yields could change if holders stake or unstake their tokens.
Yet the most revealing numbers don’t appear in the staking yield table.
They appear in the validator viability analysis.
At the proposal’s $4.30 reference price, its model estimates that 170 validators could cover their operating costs using measured commission income and rewards on their own stake under the existing 2.5% issuance ceiling.
At 1.6%, that number falls to 146.
The proposal describes the loss as 24 out of roughly 405 validators, or 5.9% of the network.
That’s accurate as a share of the entire validator set.
But consider a different denominator.
Those 24 operators represent 14.1% of the 170 validators that the model initially considered economically self-sufficient.
In other words, the proposed reduction removes roughly one in seven operators from the group that could previously cover its modeled expenses.
The distinction matters.
The same model already considered most validators unable to meet its self-sufficiency test at the existing issuance rate. The proposed cut makes that smaller viable group smaller still.
The analysis uses estimated monthly operating expenses of $500 for block producers and $200 for standard nodes, alongside recorded operator ownership and commission data.
These are modeled economics, not proof that 24 validators will shut down or that the others currently operate at a loss.
Validators can receive delegations, benefit from outside support programs, subsidize infrastructure, or operate under different cost structures.
Still, the numbers reveal something important about NEAR’s security economy.
A large validator set does not necessarily mean every operator can independently finance the work required to remain in that set.
And this is where the 19-NEAR figure from the opening becomes relevant.
Consider an illustrative small validator operating with 40,130 NEAR in delegated stake, charging a 5% commission.
At a gross staking yield of 5.268%, this stake generates about 2,114 NEAR in annual rewards.
The operator’s 5% commission amounts to roughly 106 NEAR per year.
At $4.30 per token, that’s about $38 per month.
Apply the proposed 3.372% yield instead.
The annual commission falls to roughly 68 NEAR, worth just over $24 per month at the same token price.
That’s a reduction of around $14 per month from an income stream that was already small.
These are Ravel’s calculations using the proposal’s staking figures, a hypothetical 5% commission, and an unchanged historical token price. They are not the reported earnings of an identified validator. Actual fees, stake composition, subsidies, and operating expenses vary.
But the example explains why a reduction that looks relatively modest to a large investor may feel very different to someone running infrastructure.
And NEAR has encountered this problem before.
NEAR Has Already Paid for One Halving
In October 2025, NEAR’s first issuance reduction came with an acknowledgment that lower rewards could create problems for smaller operators.
The NEAR Foundation’s announcement paired the halving with proposals for additional incentives.
One of them, HSP-002, proposed allocating 100,000 NEAR annually to support smaller validators, including quarterly payments for qualifying operators.
The reasoning was straightforward.
Large validators could absorb a significant decline in rewards more easily. Smaller, independent operators might struggle, raising concerns about consolidation and decentralization.
Those concerns did not automatically prevent the 2025 change.
The network proceeded, and the validator set subsequently expanded, according to the historical figures presented in the new governance discussion.
Supporters of HSP-029 see that experience as evidence that lower issuance does not necessarily destroy validator participation.
Critics see something else.
A community participant posting as awstian argued that NEAR keeps improving its tokenomics for prospective investors while reducing rewards for people already committed to the ecosystem.
The criticism goes beyond small validators.
During a two-week period examined by the proposal’s authors, NEAR’s price reportedly climbed 86%, while the proportion of tokens staked declined from 46.92% to 42.71%.
The authors interpret that divergence as evidence that staking participation responds more strongly to price and liquidity opportunities than to the issuance rate itself.
Awstian challenged the conclusion.
The objection is economically reasonable: when tokens leave staking, the remaining staking yield can rise mechanically because fewer tokens share the rewards. Observing higher yields alongside falling participation does not, by itself, prove that yields do not influence holders’ decisions.
It may simply mean another incentive was stronger during that particular period.
Two weeks of market behavior cannot settle how sensitive long-term staking participation will be to a permanent reduction in rewards.
There’s another difference between the two issuance cuts.
HSP-029 creates no new validator support mechanism.
Its authors considered a treasury-funded arrangement to guarantee basic operating costs, but rejected the design because it would require price oracles, administrative decisions, or additional identity-related safeguards.
Existing programs continue under their own rules where applicable, but the new proposal offers no additional automatic safety net if validator economics deteriorate.
The authors argue that issuance is the wrong instrument for supporting small operators in the first place.
And they may have a point.
Their own research suggests many small validators depend on delegated stake and outside support rather than significant capital of their own.
Increasing inflation would not necessarily solve that structural problem.
But reducing inflation doesn’t solve it either.
The Company Behind the Proposal Has Its Own Bill
There is another detail worth examining.
HSP-029 did not originate from an anonymous token holder looking for a quick price pump.
Its author, Sal Ternullo, leads SVRN, a Nasdaq-listed company that disclosed holdings of about 55 million NEAR.
More than 90% of those tokens were staked, accounting for over 8% of NEAR’s total staked supply at the proposal’s measurement point.
SVRN also participates in NEAR’s validator infrastructure ecosystem through third-party partners.
That gives the company substantial economic exposure to the policy it supports.
According to its own disclosure, the proposed reduction would cost SVRN roughly 855,000 NEAR in annual staking rewards at the target rate, based on the company’s stated modeling.
That’s hardly an insignificant sacrifice.
Yet SVRN believes the long-term benefits of lower dilution, improved supply predictability, and stronger token economics justify accepting reduced staking income.
This is an important counterweight to the argument that the proposal simply benefits investors at validators’ expense.
One of its largest corporate supporters would also receive fewer staking rewards.
But SVRN is not a typical small validator.
It holds tens of millions of tokens, giving it direct exposure to any future increase in NEAR’s value. An infrastructure operator with little self-owned NEAR cannot necessarily compensate for lost income through token appreciation.
Both groups operate under the same monetary policy.
They don’t have the same economic position.
And that difference becomes more significant when the network begins treating reduced issuance as a long-term promise.
The Price of Making NEAR Scarcer
The proposal did not emerge in isolation.
In August, NEAR co-founder Illia Polosukhin withdrew an earlier plan to establish a Sovereign Fund that could invest capital and generate returns for network security and ecosystem needs.
In his withdrawal statement, Polosukhin acknowledged concerns about allowing administrators to decide how capital should be invested and who should receive the proceeds.
Those decisions introduce governance, counterparty, and political risks.
He also identified demand for NEAR’s products and services as a fundamental constraint.
HSP-029 takes a deliberately simpler approach.
Instead of replacing algorithmic rewards with an investment fund, it reduces the number of tokens the protocol creates.
But simplicity comes with a trade-off.
The proposal explicitly rejects an automatic mechanism that would increase issuance again if the network’s security budget became insufficient.
Its authors prefer a predictable monetary schedule. Any future increase would require another governance decision.
That could strengthen confidence in NEAR’s monetary policy.
It also means a deterioration in validator economics would not automatically reverse the reduction.
The network would need to recognize the problem and respond through governance.
Supporters believe there is enough time to do that.
Opponents worry about weakening incentives before the network has developed sufficient revenue to replace them.
NEAR’s product businesses, particularly Intents, provide an important part of the bullish argument. The ecosystem has already begun directing revenue toward NEAR buybacks, and its tokenomics strategy presents growing adoption as a route toward a more sustainable economic model.
But revenue that supports token buybacks is not automatically revenue that pays validators.
And reducing token issuance does not, by itself, create a new source of income for those operators.
The distinction matters because the proposed 1.6% rate is not yet a network reality.
The House of Stake vote passed with roughly 99.96% support among voting veNEAR, according to the governance portal.
But that result does not mean 99.96% of all NEAR holders approved the change, nor does it mean the network’s validators have adopted it.
The proposal must still clear the remaining governance reviews, a roughly 90-day grace period, and the protocol upgrade process.
Under NEAR’s established upgrade rules, validators ultimately determine whether the new issuance schedule becomes binding.
That final step matters more than the celebratory headlines suggest.
The people responsible for keeping the network operational still have a say in whether to accept the economics that will fund their work.
And those economics deserve closer scrutiny than a single supply-reduction percentage.
At the proposal’s modeled staking participation rate, the new system would deliver roughly 36% less gross staking yield.
The projected six-year supply would be 4.36% smaller.
Twenty-four currently self-sufficient validators would fall below the model’s operating-cost threshold.
None of those outcomes guarantees a weaker network.
A healthier token price, additional delegation, better validator economics, or stronger revenue could offset some of the pressure. The model’s assumptions may also differ substantially from conditions when the ramp finishes.
But none of those favorable outcomes is guaranteed either.
NEAR is attempting to reduce dilution without undermining the economic incentives that helped secure the network.
Its proposal provides a detailed case for why the trade-off is worth making.
The numbers also show why the decision isn’t free.
NEAR can stop creating 66 million tokens. It still has to pay for the network that makes those tokens worth holding.
