Near Protocol's NEAR token fell roughly 7% on Tuesday, even as the community approved a governance proposal to gradually reduce the network's maximum annual token issuance rate from 2.5% to 1.6% over 24 months.

NEAR traded at $3.82 as of 11:06 am UTC, extending its weekly decline to roughly 13%, according to CoinMarketCap.

Proposal clears with 99.9% support

The price drop followed Monday's approval of HSP-029, titled “Establish a 24-month issuance ramp to a 1.6% target rate of NEAR token emissions.” The proposal received support from 99.9% of participating voting power, with approximately 3.28 million vote-escrowed NEAR (veNEAR) tokens — NEAR locked for use in governance — cast in favor, according to the NEAR House of Stake governance platform, the protocol's on-chain venue for community voting.

Token issuance refers to newly minted NEAR entering circulation, primarily through rewards distributed to network validators and delegators. As a proof-of-stake network, NEAR relies on validators staking the token to process transactions and secure the chain, and issuance-funded rewards are the primary incentive for that work. Issuance rates shape the pace at which a chain's total supply grows and, by extension, the degree of long-term dilution faced by existing holders. Rather than an immediate cut, HSP-029 establishes a 24-month ramp toward the lower target rate.

Lower yields, slower supply growth

Under the approved plan, projected gross staking yields would decline from 5.2% to 3.3% by the end of the 24-month period. Because those yields are funded by issuance, the ramp directly changes the reward economics for the validators and delegators who stake NEAR. The proposal's estimates indicate that issuance would fall by 11.8 million NEAR over two years — worth about $45 million at the current price — and by 66.1 million NEAR over six years, reducing long-term token dilution.

Veto window and implementation

The measure remains subject to a 14-day veto window, during which the Security Council can block the proposal. If the veto period passes without action, the proposal will be ratified, followed by a 90-day grace period before the issuance reduction takes effect.

Implementation also depends on validators adopting the necessary technical upgrade, making the veto window's close and subsequent validator coordination the key milestones to watch before the ramp begins.

Originally reported by Cointelegraph.