Key Points
- NEAR Governance Approves a 36% Reduction in Annual Issuance Volume
- Despite supply reforms, token prices still fell by nearly 9%
- Lower inflation may reduce staking rewards and increase the pressure of dilution.
The governance community of NEAR Protocol has approved a proposal to reduce the annual token issuance by 36%, which could result in millions of tokens being removed from the future supply; meanwhile, against the backdrop of a broader sell-off in cryptocurrencies, NEAR has still fallen by nearly 9%.
On November 3rd, the trading price of this token was around $3.75, which represents a decrease of about 8.75% in the past 24 hours and over 14% in the past week. This decline continues the price correction that occurred after NEAR rose to around $6 in October.
According to the official HSP-029 proposal, House, of, and Stake have approved a reduction of the maximum annual issuance rate from 2.5% to 1.6% within 24 months, with approximately 99.9% of the voting rights in favor of this proposal.
NEAR may see a reduction of 66 million tokens supplied
The proposal will gradually reduce the annual issuance volume by about 0.0375 percentage points each month, rather than making a one-time reduction immediately.
The proposal author estimates that, compared to maintaining the current issuance cap, this change could prevent 11.8 million NEAR from entering circulation within two years, and 66.1 million from entering circulation within six years.
The daily circulation will ultimately be reduced from approximately 89,517 to 57,291 copies, while the existing distribution structure remains unchanged.
Under this arrangement, 90% of the newly issued NEAR will be allocated to staking participants, while 10% will go into the protocol’s treasury.
This proposal also presents trade-offs for verifiers.
Assuming that the participation rate in staking remains unchanged, the expected gross staking yield is likely to decline from approximately 5.27% to 3.37%.
The proposal author estimates that under a lower issuance model, 24 out of 405 validators may lose their economic self-sufficiency.
This change is similar to the inflation reform previously implemented by Solana, reflecting an increasing interest in the market to reduce token dilution while maintaining blockchain security.
Why is NEAR still falling despite the decline in inflation?
The decline of NEAR highlights the discrepancy between the improvement in the token economy and the immediate formation of investment demand.
This cryptocurrency has previously faced significant selling pressure, and as leveraged traders reduce their exposures, futures clearing has accelerated.
On November 2, reports indicated that among seven major exchanges, the total value of open contracts was close to $856 million, a decrease of 6.5% from the previous day.
This issuance reform has also not yet taken effect.
After the governance vote is passed, the proposal must also undergo review by the Security Committee, a 90-day preparation period, and technical adoption by the validators.
Meanwhile, the broader ecosystem of NEAR continues to expand.
Its cross-chain infrastructure now supports Bitcoin, XRP, and Dogecoin transactions through applications such as Infinex.
Institutional interest has also increased, with Bitwise advancing its NEAR ETF registration in September.
However, higher network activity or lower issuance volumes cannot guarantee price increases.
NEAR What will happen to the price next?
The current challenge is to regain the psychological barrier of $4 after losing the previous support level of $4.30.
The range of $3.50 to $3.70 is becoming a potential support area for a decline, and if prices rebound above $4, short-term sentiment may improve.
In a longer-term perspective, as the adoption of NEAR by institutions and cross-chain activities continue to develop, issuing reductions may become more meaningful.
