NEAR issuance cut: how a DAO vote becomes a protocol rule

Token holders in NEAR Protocol's House of Stake, its on-chain governance body, have approved a lower yearly issuance ceiling: 1.6% instead of 2.5%, phased in over 24 months, Unchained reported. The vote is only the first gate.

The change in one paragraph

The proposal, HSP-029, was written by Sal Ternullo, chief executive of the Nasdaq-listed company SVRN. It caps new NEAR issuance at 1.6% a year instead of 2.5%. The cut does not happen in one jump. The cap slides down by about 3.75 basis points each month until it reaches 1.6% at month 24. A basis point is one hundredth of a percentage point. The split of freshly minted tokens would not change: stakers keep receiving 90%, and the protocol treasury 10%. NEAR announced the result on X on Nov. 2, but according to Unchained it gave no vote count, and the proposal page Unchained reviewed showed no tally.

What is a DAO, and why its vote is not the last word here

A DAO, or decentralised autonomous organisation, is a group that makes decisions through votes recorded on a blockchain, usually weighted by tokens. The House of Stake plays that role for NEAR. But a DAO vote only expresses what token holders want. The rules of the chain live in the software that validators run, and a rule only binds once validators adopt it in a protocol upgrade.

HSP-029 says this openly: by its own text, a House of Stake vote is not enough to put it into force. The vote is a signal with a route to becoming a rule, not the rule itself.

Under the hood: two keys to turn

It helps to think of the change as needing two keys. The first is the social key: holders vote, and a council checks the result. The second is the technical key: validators install a new version of the protocol that contains the lower cap. If the second key is never turned, the first changes nothing on-chain.

The moving parts, in order, as Unchained reported them:

• The House of Stake vote, which has now passed.
• A review by the House of Stake Security Council before the result is ratified.
• A grace period of roughly 90 days after ratification.
• Adoption by validators through a protocol upgrade, which is the step that makes the rule binding.

The cap is recalculated every epoch, the short fixed period NEAR uses to update validator sets and rewards, instead of falling in large steps. A smooth slope means there is no single date on which the cap drops all at once.

This route is not new. According to the proposal, the 2025 halving that brought issuance down to 2.5% also went through a validator upgrade.

Who is affected: stakers, validators and the treasury

Staking reward is a share of new issuance divided among everyone who stakes. If issuance falls and the amount staked stays the same, each staker earns less. If staking participation holds where it is, Ternullo's model sees gross yield easing to about 3.37% once the target is reached, against roughly 5.27% today.

Validators run the machines that produce blocks, and they pay for them out of the fees they charge on rewards. A smaller reward pool squeezes that margin. By the proposal's own estimate, 24 validator pools would slip below break-even at the lower rate, based on the token price it took in September. That is the main design trade-off: lower dilution for holders against thinner economics for operators, with the proposal itself flagging pools that would fall short.

On supply, Ternullo's figures show 11.8 million fewer NEAR created in the first two years and 66.1 million fewer by year six, which would leave supply 4.36% under the path it is on now. Unchained added its own daily arithmetic, based on total supply as measured on Sept. 22: roughly 89,500 new NEAR each day under the 2.5% ceiling versus about 57,300 under the 1.6% target, a gap of roughly 32,200 a day after the ramp ends. Staking rewards can change or stop, and anyone who stakes or runs a validator can lose money, for example if rewards no longer cover costs or the token price falls.

Disclosures and background

The author's firm has a stake in the outcome. SVRN disclosed a holding of about 55 million NEAR, with more than 90% of it staked, making up over 8% of all staked NEAR. It also said it meant to back the proposal. Ternullo noted that SVRN's own staking income shrinks under the cut too.

Ternullo described HSP-029 as one of several options that came up after NEAR co-founder Illia Polosukhin pulled his Sovereign Fund proposal in August. Polosukhin had pointed to "risks the protocol should not internalize."

Status and next steps

As of Unchained's report, the vote has passed but nothing has changed on-chain. Security Council review, ratification, the grace period and a validator upgrade all still lie ahead. After the ramp starts, NEAR plans quarterly reports that set actual issuance side by side with the published schedule.

Sources

• Unchained, 3 Nov 2026

AI wrote this summary from the primary documents and reports cited above. It went live automatically after checks that figures match those sources and nothing is copied; there was no human review. It explains a protocol or rule change and is not investment advice.