Near Protocol cuts annual token issuance to 1.6 percent

Near Protocol holders voted almost unanimously to reduce the annual token issuance from 2.5 percent to 1.6 percent over the next two years. This adjustment follows a previous reduction from 5 percent to 2.5 percent implemented about a year ago. Ilya, co-founder of Near Protocol, explained that the initial 5 percent inflation was designed to bootstrap the validator network six years after launch. The new reduction aims to align the supply schedule with Bitcoin, which is at 0.8 percent after its last halving, and Zcash, which is at 4 percent. The proposal, put forward by Sovereign, seeks to create a supply-demand economy where revenue from Near Intense and Near AI can eventually pay for validator staking and AI compute. This structure potentially leads to a fixed supply model in the future. Ilya noted that while fixed supply offers a strong narrative, it can create unsustainable economics if not paired with sufficient ecosystem revenue. He argued that reducing issuance is necessary to balance the ecosystem's economics with the store-of-value narrative, allowing the protocol to transition toward a fixed supply without starving the network of funding.