Near Protocol faces pivotal vote to slash token inflation by half
A new proposal from HOT Protocol, a decentralized group operating on the NEAR Protocol, has called for a significant reduction in the AI crypto project‘s token inflation rate.
On June 24, the decentralized organization submitted a plan to slash NEAR’s annual inflation rate from 5% to 2.5%. The proposal aims to enhance the long-term sustainability of the crypto project’s token and realign incentives across the network.
According to the proposal, the current 5% inflation rate has become a liability, harming NEAR’s competitiveness by “causing unnecessary token supply growth and dilution.”
HOT protocol explained that NEAR’s inflation rate was designed with the assumption that fee burns from high transaction volumes would offset much of the supply growth. In practice, however, only 0.1% of the token supply was burned over the past year.
As a result, the full inflation rate continues to inflate the circulating supply by over 60 million NEAR annually, outpacing actual network growth and user activity.
To counter this, the new proposal suggests reducing the staking yield from 9% to 4.5%, which could make NEAR-based DeFi offerings more competitive.
While this might lead some validators to exit, it also opens space for new demand-generating features, including transaction fee revenue from Intent-based models.
The DAO highlighted the importance of its proposal, stating:
“Reducing NEAR’s inflation is an urgent priority. Every additional month of the status quo means millions of new NEAR entering circulation, which is not only dilutive but also unnecessary given the low fee burn. High inflation without high usage is unsustainable.”
Community support
The proposal has drawn strong backing from the NEAR ecosystem, with many industry players expressing support.
Illia Polosukhin, co-founder of NEAR Protocol, endorsed the plan, saying it better positions NEAR as a potential store of value in emerging AI-focused environments.
He also highlighted the need to reduce the reliance on staking as the primary source of yield, a dynamic that has limited DeFi innovation on NEAR so far.
Avichal Garg, the co-founder of Electric Capital, echoed similar views, while adding:
“[I am a] big fan of this for the NEAR ecosystem. The future of crypto [is] lower emissions, fee switches to drive revenue to tokenholders, and [rewarding] long-term holders via more revenue.”
Meanwhile, the proposal is currently undergoing a validator vote and requires a two-thirds majority to pass. As of press time, 13.36% of the required 66.67% threshold has been secured.
If approved, implementation is expected by Q3 2025, pending a smooth technical rollout and final community validation.
The post Near Protocol faces pivotal vote to slash token inflation by half appeared first on CryptoSlate.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Wintermute’s Aggressive Liquidations Trigger Panic: 5 Cryptos Worth Risking Before Buyers Return to the Market
Once the Federal Reserve starts the rate hike cycle, is "three consecutive hikes" a reasonable expectation?
BMO expects consecutive rate hikes in October and December, with a total of three increases potentially wiping out all rate cut gains for 2025. Vanguard believes "three consecutive hikes" is a reasonable starting point, but the actual number could be as high as six. There are historical exceptions: in 1997, the Federal Reserve raised rates only once and took no further action for the following 18 months. Meanwhile, trillion-dollar debt financing by AI giants, private credit exposure in the insurance industry, and the 10-year U.S. Treasury yield approaching 5% are the most dangerous pressure points in this rate hike cycle.
Goldman Sachs Also Changes Its Tune: The Fed Will Raise Interest Rates Next Week!
Goldman Sachs has shifted from predicting a rate hold to betting on a 25 basis point hike next week, stating that this change is not due to particularly bad inflation data—the August CPI was not perfect, but it wasn’t alarming either. The real key is that hawkish comments from Waller have already shaped market expectations: "If the inflation data isn’t perfect, there will be a rate hike." If the Federal Reserve backs down now, its credibility will suffer a serious blow and long-term interest rates could react sharply and immediately.
Crypto prices
More
