A serious conflict is brewing in the NEAR Protocol ecosystem. The community cannot agree on whether to reduce network inflation from 5% to 2.5% in order to balance token issuance with the network’s real revenues.
Although the majority of participants voted “for,” the proposal did not receive the required level of support for approval, and now some developers are considering implementing changes without formal approval.
NEAR operates at a loss
The main reason for the dispute is the mismatch between network revenues and validator payouts. Every year, NEAR Protocol distributes about $140 million in tokens among participants who maintain the network. At the same time, the total value locked (TVL) is only $162 million, and the cumulative revenue since launch in 2020 is $17 million.
According to DeFiLlama, in the past 30 days NEAR generated only $259,000 in revenue, making network maintenance extremely costly. In fact, the project pays validators almost as much as the entire ecosystem is worth.
Therefore, the idea to reduce inflation seems logical. Lower issuance should slow the release of new coins, limit price pressure, and bring NEAR’s model closer to self-sufficiency.
However, the vote to reduce inflation did not pass. Of the more than 50% who supported the initiative, it fell short of the 66.67% threshold required for adoption under governance rules. The proposal was officially declared unsuccessful.
Developers may implement the reduction without approval
The story did not end there. Some members of the core NEAR team hinted that they might still implement the inflation reduction in the next software update—even without approval through the voting system.
This position caused a sharp reaction from the community. The validator group Chorus One stated that such a move “jeopardizes NEAR’s legitimacy and undermines trust in the governance system.”
“If the team can impose decisions without consensus, it creates a dangerous precedent. NEAR risks losing the principle of decentralization on which it is built,” wrote Chorus One participants.
At the same time, some investors supported the developers’ idea. L1D fund representative Louis Thomazo noted that “reducing inflation is a sound step,” and that “sometimes a protocol has to act according to circumstances, even if it goes beyond strict rules.”
The community is divided
Disagreements are intensifying. One part of the participants insists on strict adherence to procedures—otherwise the governance system loses its meaning. The other claims that maintaining the network’s viability should take precedence over bureaucracy.
Such conflicts have already occurred in blockchain history. The most famous case is the Ethereum split in 2016 after the DAO hack, when disagreements between developers and the community led to the emergence of Ethereum Classic.
Some experts warn that if the NEAR situation drags on, it could end with a similar hard fork, dividing the ecosystem into two camps.
An example from other protocols
Cases of forced intervention have already occurred. For example, in March the Hyperliquid team manually changed the price in the oracle after one trader manipulated the JELLY futures market, causing multimillion-dollar losses.
This decision helped stop a cascade of liquidations and preserve the platform’s liquidity. However, NEAR is a larger network, and any uncoordinated change here could have much more serious consequences.
State of the NEAR token
At the time of publication, the NEAR token had risen 1.5% in a day and is trading at $2.29. Over the week, the asset gained 6.5%, and its market capitalization reached $2.9 billion. The daily trading volume is about $101 million. Nevertheless, from the all-time high of $20.44 recorded in mid-2022, the token still lags by 88.8%.
What’s next?
If the developers do decide to reduce inflation without a vote, NEAR will find itself in a difficult position: either strengthen economic sustainability or undermine the governance principles on which the project was built.
The community is closely watching every step of the team. The next network update could be a turning point—not only for NEAR, but for the entire model of decentralized governance in blockchains.
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