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NEAR's Reduced Inflation: Sensible Adjustment or Weakening of Governance?

NEAR's Reduced Inflation: Sensible Adjustment or Weakening of Governance?

Bitget-RWA2025/11/02 13:02
By: Bitget-RWA
- NEAR Protocol slashed annual token inflation to 2.4% from 5%, bypassing a failed community vote and sparking governance debates. - The October 30 upgrade reduces new token issuance by 60 million yearly, lowers staking yields to 4.5%, and prioritizes curbing dilution. - Critics, including staking firm Chorus One, accuse the core team of undermining decentralized governance, as NEAR’s price fell 8% post-announcement. - The move mirrors strategies by Solana and Polkadot but highlights tensions between econo

NEAR Protocol has reduced its yearly token inflation from 5% to 2.4%, sparking a governance controversy after the change was implemented despite a failed community vote. The update, which took effect on October 30, cuts annual token creation by almost 60 million, decreases staking rewards from 9% to 4.5%, and is intended to limit dilution, according to

. The core development team described the change as a technical requirement, but opponents claim it weakens the principles of decentralized governance, as detailed in .

Despite an on-chain vote on August 1 that received just 45.06% support—far short of the two-thirds majority needed—the inflation cut was still enacted, the crypto.news article reports. NEAR’s CTO Bowen Wang justified the decision, explaining that validator consensus is the ultimate governance authority. "The upgrade can only go live if 80% of staked tokens approve," Wang stated, highlighting that protocol changes have always depended on validator agreement rather than community ballots. Validators now have a 30-day window to adopt the update, with 80% of staked tokens required for it to take effect, according to

.

NEAR's Reduced Inflation: Sensible Adjustment or Weakening of Governance? image 0

The move has faced strong opposition from validators and staking platforms. Chorus One, a leading staking provider, accused the core team of "compromising the integrity of protocol governance" by disregarding the community’s vote, as reported by Bitget. The company advised validators to postpone the upgrade, warning that such actions could undermine confidence in decentralized governance. Following the announcement, NEAR’s price dropped by 8%, though broader market conditions also played a role. On October 29, the token was valued at $2.32, with a 24-hour trading volume of $190 million, according to the

.

This reduction in inflation is part of a wider industry movement to balance token economics with long-term viability. Networks such as

and have also revised their inflation policies to better align validator incentives with network earnings, as noted in the OKX explainer. Nevertheless, NEAR’s method has brought to light the ongoing conflict between economic efficiency and governance ideals. Supporters believe the change is vital to prevent significant dilution and attract institutional capital, while critics argue that ignoring community consensus could lead to centralization, according to the Bitget post.

This dispute highlights a fundamental issue for blockchain initiatives: balancing technical governance with democratic involvement. NEAR’s core developers assert that validator-led upgrades are crucial for maintaining network reliability, but detractors caution that excluding the community could damage trust, as the crypto.news article points out. The OKX explainer suggests that future governance updates, such as improved voting systems or greater transparency, may be necessary to resolve these issues.

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.
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