SKN | NEAR Token Falls 7% Despite Approval of Proposal to Reduce Annual Issuance

Key Points:

• NEAR Declines Despite Governance Approval: The NEAR token fell approximately 7% on Tuesday, extending its weekly losses to around 13%, despite strong community support for an issuance reduction.
• Annual Issuance Target Reduced: Proposal HSP-029 aims to lower the maximum annual token issuance rate from 2.5% to 1.6% over 24 months.
• Implementation Still Pending: The proposal received 99.9% support from participating voting power but remains subject to a 14-day Security Council veto period, a subsequent grace period and validator upgrades.

Near Protocol’s NEAR token declined on Tuesday even after its community approved a proposal designed to reduce long-term token dilution. The decision to lower the network’s annual issuance target represents a significant adjustment to its token economics, although the market response remained negative during the latest trading session.

The development highlights the distinction between governance decisions intended to improve a token’s long-term supply dynamics and the factors influencing its immediate market valuation.

NEAR Extends Weekly Losses Following Governance Vote

NEAR traded at approximately $3.82 as of 11:06 UTC on Tuesday, representing a decline of roughly 7% during the session. Its weekly losses reached approximately 13%, according to CoinMarketCap data cited in the report.

The decline followed the approval of governance proposal HSP-029 on Monday. The proposal received support from 99.9% of participating voting power, with approximately 3.28 million vote-escrowed NEAR (veNEAR) tokens cast in favor.

The result indicates strong support among participating governance voters for changing the network’s issuance framework.

However, the token’s price movement suggests that approval of the proposal did not translate into an immediate positive market reaction. The available information does not establish a direct cause for the decline.

Proposal Targets Lower Annual Token Issuance

HSP-029 proposes a gradual reduction in NEAR’s maximum annual issuance rate from 2.5% to 1.6% over a 24-month period.

The adjustment is intended to reduce long-term token dilution by limiting the number of new tokens entering circulation.

According to the proposal’s estimates, the change would prevent approximately 11.8 million NEAR from being issued over two years. At the token’s price referenced in the report, that amount represents approximately $45 million.

The projected reduction becomes more substantial over a longer period. The proposal estimates that issuance would be reduced by approximately 66.1 million NEAR over six years.

These figures illustrate the potential effect of the proposed monetary adjustment on the network’s future token supply.

Lower Issuance Also Reduces Projected Staking Yields

The proposed changes would also affect the economics of staking.

NEAR’s projected gross staking yield is expected to decline from approximately 5.2% to 3.3% by the end of the 24-month adjustment period.

This reflects the relationship between token issuance and staking rewards. Lower issuance can reduce the number of newly distributed tokens available to support staking yields, even as it limits the rate at which the overall token supply expands.

For token holders, the proposal therefore introduces a trade-off between lower projected dilution and reduced gross staking returns.

The longer-term implications will depend on how the revised issuance structure interacts with network participation, staking demand and broader market conditions.

Implementation Requires Additional Approval Steps

Although HSP-029 has received overwhelming support from participating voters, the proposal has not yet completed the full implementation process.

It remains subject to a 14-day veto window during which the Security Council can block the measure.

If the proposal is not vetoed, it will proceed to ratification, followed by a 90-day grace period before the issuance reduction begins.

Implementation will also require validators to adopt the necessary technical upgrade.

These steps mean that the approved proposal does not immediately change NEAR’s issuance rate. The timeline remains dependent on governance procedures and the technical coordination required across the network.

Outlook

NEAR’s proposed issuance reduction represents a meaningful change to its long-term token economics, with the potential to limit supply expansion while lowering projected staking yields. However, the immediate price decline demonstrates that changes to tokenomics do not necessarily produce an immediate improvement in market performance. Investors will be watching the Security Council’s decision, the validator upgrade process and the eventual implementation of the new issuance schedule. The broader assessment will depend on whether reduced dilution can support sustainable token demand without materially weakening staking participation.