NEAR Protocol has confirmed the implementation of a crucial network update, known as the “halving,” which significantly reduces the inflation rate of its native token. This fundamental change moves the annual inflation rate from 5% to approximately 2.4%.
The development team has justified this measure as necessary to curb the token’s high dilution. Previously, nearly 60 million new NEAR tokens were created annually, a figure that substantially exceeded the network’s fee burns, thereby generating constant selling pressure on the asset. The objective of this update is to realign the protocol’s economic incentives.
The market's reaction to the announcement was immediate and negative, occurring within a general downturn in the crypto sector. The price of NEAR experienced a decline of nearly 8% during the day, falling to $2.10 at the time of this writing.
Impact on Staking and the Shadow of the Failed Vote
Beyond token issuance, this update redefines profitability for those securing the network. Staking yields will experience a significant cut, falling from an APY (Annual Percentage Yield) of nearly 9% to a new estimated rate of 4.5%.
This calculation is based on the assumption that the current proportion of half the total supply participating in staking is maintained. This adjustment aims to balance rewards with the new reality of lower issuance.
However, the decision to implement the “halving” has generated debate within the community. The update was executed despite the original governance proposal, which sought to ensure NEAR Protocol reduces inflation, failing to achieve the required consensus.
The vote in question, which concluded on August 1, only garnered the support of 89 validators. This represented only 45.06% of the affirmative votes, a figure considerably below the approval threshold set at 66.67% (two-thirds) for a proposal to be ratified by the community.
Although the proposal technically failed, the NEAR Protocol core team proceeded with the implementation, prioritizing the economic adjustment over the formal outcome of the vote.
The information presented in this article is for informational purposes only and should not be interpreted as investment advice. The cryptocurrency market is highly volatile and may involve significant risks. We recommend conducting your own analysis.