NEAR's Inflation Cut and Governance Strife
On October 30, 2025, the NEAR protocol implemented a network upgrade reducing annual NEAR token inflation from 5% to 2.4%, bypassing a community vote's failure to meet approval.
This unilateral decision has sparked controversy over governance integrity, with key validators criticizing the move, potentially affecting NEAR's standing in the decentralized ecosystem.
NEAR Protocol's decision to implement a network upgrade reducing annual token inflation from 5% to 2.4% disregarded a previous community vote. The core leadership team's action, despite lacking governance support, prompted significant discontent from several validators. Concerns have arisen over this decision's possible implications on decentralized governance.
The upgrade's halving of inflation effectively reduces newly minted tokens by almost 60 million yearly and decreases staking yields. As a result, staking rewards dropped from 9% to around 4.5%, affecting validator strategies and economic participation within the protocol. This abrupt reduction altered the network's economic framework, raising sustainability questions.
Chorus One, a key staking service provider, criticized the NEAR core team's unilateral decision, raising issues over the integrity of decentralized governance. The staking firm advocated for postponing node upgrades, citing that this move establishes a "dangerous precedent" in protocol governance. Despite these concerns, NEAR's co-founders argued the change aligns with the protocol's economic goals.
"Forcing protocol changes without governance approval endangers the integrity of decentralized governance. We urge validators to delay node upgrades—this sets a dangerous precedent." — Chorus One, Staking Provider
Price Decline and Expert Insights on NEAR's Controversy
Bitcoin's halving events, known for extended bullish impacts, present contrasts as NEAR's protocol decision highlights potential centralization risks given the failed governance vote.
NEAR Protocol (NEAR) reports a current price of $2.14 with a market cap of $2.74 billion and a dominance of 0.07%. The 24-hour trading volume stands at $136.41 million, down 27.34%. NEAR's price fell 11.69% over 90 days, reflecting larger market conditions as of November 1, 2025, 10:31 UTC.
Insights from Coincu's research indicate potential outcomes of this governance controversy that could reshape the protocol's economic structures. These developments signal both financial and technological shifts, given NEAR's focus on protocol sustainability and validators' growing role in governance decisions.