A NEAR token issuance reduction proposed on October 7, 2026, would lower the network’s maximum annual issuance from 2.5% to 1.6% over 24 months. HSP-029 pairs slower dilution for holders with lower staking rewards: its modeling projects 66.1 million fewer NEAR issued over six years, while gross staking yield falls from 5.268% to 3.372% at the measured participation rate.
Key takeaways
HSP-029 preserves the 90% staker and 10% treasury allocation.
The model projects a 4.36% smaller supply after six years.
Validator adoption is required beyond House of Stake ratification.
The viability analysis projects 24 of 405 pools losing economic self-sufficiency.
How the proposed NEAR token issuance reduction works
HSP-029 changes one protocol parameter: the maximum annual issuance rate. It proposes a gradual, per-epoch decline of roughly 3.75 basis points per month , beginning after a 90-day grace period following ratification.
The 90/10 issuance split remains intact. The proposal introduces no fund, administrator, oracle, discretionary allocation or spending program, and redirects no validator rewards. Existing contracts and staking mechanics remain unchanged.
Author Sal Ternullo (SVRN) presents that simplicity as a response to the withdrawn Sovereign Fund proposal. HSP-029 says feedback from validators, holders and Illia Polosukhin persuaded SVRN that discretionary allocation itself—not merely its controls—was the problem.
The proposal also leaves protocol revenue untouched, including intent fee-switch buybacks and other revenue removed from circulation.
Lower supply growth, lower staking rewards
The proposal’s model estimates 11.8 million NEAR in avoided issuance over two years and 66.1 million NEAR over six years. Those totals imply supply reductions of approximately 0.86% and 4.36%, respectively, against maintaining the 2.5% issuance cap.
The calculations use a NEAR mainnet snapshot from September 22, 2026, at block 216,701,043. At that measurement, 42.71% of supply was staked. Holding participation constant, gross staking yield declines from 5.268% to 3.372% at the target issuance rate.
For stakers, the NEAR token issuance reduction means receiving fewer tokens while their holdings face less dilution. The proposal estimates that someone staking 1,000 NEAR would finish year two with about 20 fewer NEAR than under an unchanged 2.5% cap. Its analysis does not claim that lower supply alone fully compensates stakers for reduced rewards.
For the 57.3% of supply unstaked in the snapshot, the proposal identifies an immediate benefit from reduced dilution without an offsetting loss of staking income .
Validator economics depend on ownership and delegation
HSP-029’s viability model projects that 24 of 405 active pools would lose economic self-sufficiency at the target issuance rate under its reference-price assumptions. The modeled number of pools covering machine costs falls from 170 to 146.
The analysis measures commission income on delegated stake plus rewards on operators’ own holdings. It uses monthly machine-cost benchmarks of $500 for block producers and $200 for standard nodes.
Its ownership data show a median operator self-stake of 128 NEAR across the measured set. Among 163 entry-cohort pools with 30,000–60,000 NEAR staked, the median operator held just 19 NEAR against 40,130 NEAR of delegated stake.
Ternullo argues that these figures make issuance an ineffective tool for supporting smaller operators: their businesses rely primarily on delegation rather than on rewards earned on their own capital.
Validator adoption and the Solana comparison
House of Stake ratification alone cannot enact HSP-029. Validators must independently adopt the protocol upgrade before the issuance change becomes binding.
The proposal benchmarks its approach against Solana’s SGP-0002, ratified on August 28, 2026, with 67.001% of stake. Solana’s schedule lowers issuance from 3.82% to 1.50% over 2.8 years, with a projected target gross yield of 2.25%.
HSP-029 presents NEAR’s path as a shallower yield reduction with a larger six-year supply effect: 4.36%, compared with Solana’s 2.60%.
The proposal estimates that each month of ratification delay forfeits roughly $4.7 million in emission savings within its modeled six-year window. Its implementation plan specifies a full-quarter grace period, per-epoch reductions thereafter and the target rate at month 24 of the ramp.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.
