- The development team behind Near, a $2.8 billion blockchain, plans to reduce the chain’s inflation by 50% through an upgrade.
- A governance vote to halve Near’s token inflation to 2.5% failed due to insufficient participation.
- The halving will now occur automatically once 80% of validators upgrade to new software.
- Critics warn this approach bypasses the formal governance vote, risking blockchain integrity.
- Near’s token price has fallen nearly 90% since its 2022 peak of $20.
The developers behind Near, a blockchain valued at $2.8 billion, intend to cut the network’s inflation rate by 50% as part of an upcoming upgrade. This change is set to automatically trigger once 80% of validators update to the new software version.
Earlier this year, a governance vote aiming to reduce Near’s annual token inflation to 2.5% lacked the required quorum and failed. Instead of abandoning the proposal, the development team shifted to a mechanism where the inflation reduction activates based on validator upgrades.
Staking service provider Chorus One criticized this move, calling it a “dangerous precedent” that undermines the blockchain’s governance, as the decision bypassed the formal voting process. Validators earn newly created tokens as rewards for securing the network, and lowering inflation could reduce these rewards unless the token price rises. Near’s token has dropped nearly 90% from its peak of $20 in 2022.
Inflation in proof-of-stake blockchains like Near is how new tokens enter circulation, rewarding validators for processing transactions and securing the chain. While inflation functions like interest paid on staked tokens, it also increases supply, which can depress token value over time. This proposed inflation cut aims to limit token supply growth and support its market value.
Supporters such as Louis Thomazeau, an investment partner at L1D, and Evgeny Kuzyakov, co-founder of Near infrastructure provider Fast Near, argue that over 90% of participating validators supported the reduction in the summer vote despite missing quorum. Thomazeau stated on X that “[Ten times] more stakers voted in favour of the proposal than against it”, suggesting broad support.
The blockchain upgrade will begin on October 28 and take about three weeks. Validators can support the change by upgrading to the new software or oppose it by moving their stake away from pools that backed the proposal. Validators such as Chorus One and Everstake opposed the halving according to voting data.
By replacing a formal vote with an upgrade-based approval system, Near’s inflation reduction depends on actual validator actions rather than a single governance tally. This approach follows examples in other blockchains; for instance, Polkadot capped its token supply, while Solana recently rejected a similar inflation reduction plan.
Osato Avan-Nomayo is a DeFi correspondent covering crypto developments for DL News.
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