The NEAR Protocol successfully reduced its token inflation from 5% to 2.5% on October 30, 2025, even though an earlier community vote failed to pass. This decision has sparked a heated debate about how blockchain networks should make important decisions.
The upgrade reduces the number of new NEAR tokens created each year by approximately half. This means that approximately 60 million fewer tokens will enter circulation every year. The change also reduces staking rewards from 9% to 4.75% for validators who help secure the network, assuming half of the total supply remains staked.
The economic problem has almost been faced
NEAR Protocol was facing a serious money problem. The network pays validators approximately $140 million in tokens every year to keep the blockchain running. But the protocol has only committed and just earned a total value of $162 million $17 million in revenue since launching in 2020. Last month alone, NEAR generated just $259,116 in revenue.
This math doesn’t work in the long run. The protocol spent much more on validator rewards than on network fees. Furthermore, NEAR only burned 0.1% of its token supply through transaction fees last year, which was not enough to offset the new tokens being created.
Community members suggested reducing inflation to make the network more sustainable. The idea was to reduce unnecessary token creation and encourage more activity in NEAR’s decentralized financial ecosystem.
Two votes, two different results
The controversy started when NEAR a community votes in August 2025. The proposal to reduce inflation received the support of 89 validators, representing 45% of participants. However, NEAR’s governance rules required 66.67% approval before the proposal could be adopted. The vote technically failed.
Despite this outcome, the NEAR development team included the inflation reduction in a protocol upgrade that was released GitHub. Starting October 21, validators could show their support by upgrading to nearcore v2.9.0. This second vote required 80% of validators to approve the change.
Source: @NEARProtocol
As of October 28, approximately 68% of validators had upgraded their nodes to support the inflation reduction. Ultimately, the threshold was reached and the upgrade went live on October 30.
Why Validators were in favor of reducing their own wages
Interestingly enough, validators voted to cut their own rewards by half. This may seem strange, but many believed this was necessary for NEAR’s long-term survival.
NEAR co-founder Illia Polosukhin explained that the current governance system has been in place since the network was launched five years ago. Validators have 30 days to upgrade their software, and changes will only occur if 80% of validators agree.
Some major investors supported the change. DWF Labs, which owns 5 million NEAR tokens and has staked 6 million, pledged to buy an additional 10 million NEAR tokens if the inflation cut passes.
The first community vote showed 91% support among validators who were able to participate. Many exchange and mutual fund validators were unable to vote due to regulatory compliance issues.
Strong opposition from major validators
Not everyone agreed with the way NEAR handled this situation. Chorus One, a major staking provider that manages more than $2.3 billion in assets, publicly criticized the decision.
In one X wire Chorus One, posted on October 22, said the move “sets a dangerous precedent and undermines the integrity of NEAR.” The company worried that NEAR’s core team could implement changes even if board votes fail.
Chorus One clarified that its main concern was not the inflation reduction itself. Instead, they resisted the idea that developers could circumvent failed governance votes by incorporating changes into software upgrades.
The staking provider declined to upgrade its nodes and encouraged other validators to carefully review any changes before updating their software.
What this means for Blockchain management
This situation raises important questions about how decentralized networks should make decisions. NEAR used two different voting systems: a community governance vote and a validator upgrade process.
NEAR’s Chief Technology Officer Bowen Wang defended the approach. He explained that the summer community vote was led by HOT DAO and LiNEAR, two community organizations. Because this type of voting takes place at the consensus layer, it requires an even higher approval threshold to ensure everyone agrees.
In the future, NEAR is new House of Stakes The governance system will decide the economic parameters. Developers will then write code to implement these decisions.
Some supporters argued that economic survival is more important than strict adherence to rules. Louis Thomazeau of the L1D Fund called the inflation cut “common sense” and said protocols should not adhere so rigidly to the rules that they harm the project.
Others worry about the precedent this sets. If core teams can bypass failed governance votes, does decentralized governance actually mean anything?
Market reaction and price impact
After the announcement, NEAR’s share price fell about 8% to $2.10. However, this decline occurred during a broader recession in the cryptocurrency market, so it is unclear how much was specifically related to the inflation news.
The long-term price impact remains uncertain. Lower inflation could reduce the selling pressure of creating new tokens, similar to how Bitcoin halvings have historically affected the price. But concerns about governance could shake investor confidence.
The path forward
NEAR Protocol is now entering a new phase with reduced inflation. The network is making progress in other areas, including cross-chain transactions via NEAR Intents and artificial intelligence applications.
The aim of the inflation reduction is to create a more sustainable economic model in which the creation of tokens is better aligned with actual network use. Whether this change strengthens or weakens community confidence in NEAR’s governance will become clear in the coming months.
This situation mirrors the challenges that other blockchain networks have faced. Ethereum faced similar governance tensions after the 2016 DAO hack, which led to a controversial hard fork. Finding the right balance between economic necessity and decentralized decision-making remains one of the biggest challenges in cryptocurrency.
The case of NEAR shows that even with clear governance rules, interpretations can differ when multiple voting mechanisms exist. The debate highlights the ongoing tensions between maintaining strict decentralization and making practical decisions for the survival of networks.
The administrative cord
NEAR Protocol’s inflation reduction has technically succeeded, but has led to a governance crisis that will shape the way blockchain communities view decision-making authority. Although the network has solved its immediate economic problem, questions about who really controls the protocol changes remain unanswered. The crypto industry will be watching closely to see whether this approach becomes a model or a cautionary tale.
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