The proposal, submitted on June 24, aims to strengthen NEAR's long-term sustainability and realign token incentives across the network.
Current Inflation and Its Impact
According to the proposal, NEAR's current 5% inflation rate is out of sync with the network’s actual growth and user activity. HOT Protocol argues that the originally designed inflation model relied heavily on fee burns from high transaction volumes to offset new supply. However, in practice, only 0.1% of NEAR’s total supply was burned over the past year. This has led to over 60 million NEAR tokens entering circulation annually—growth that HOT Protocol describes as dilutive and harmful to NEAR’s competitiveness, particularly in a market where efficient capital usage is increasingly important.
Recommendations for Lowering Inflation
To address this imbalance, the proposal also recommends lowering the staking yield from 9% to 4.5%, aiming to better align with current network activity and make NEAR-based DeFi offerings more competitive compared to other ecosystems.
Positioning NEAR in the Crypto Industry
HOT Protocol sees the reduced inflation as a strategic move to position NEAR more effectively within the broader crypto landscape, emphasizing sustainability over excessive token issuance. The proposal is now open for community discussion and governance consideration.
The proposal to reduce NEAR inflation and realign token incentives opens new avenues for the network's sustainable development, potentially enhancing its appeal in the cryptocurrency market.
