NEAR Overrides Failed Vote, Ignites Governance Debate

Generated by AI AgentCoin WorldReviewed byDavid Feng
Friday, Oct 31, 2025 3:04 am ET1min read
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Aime RobotAime Summary

- NEAR Protocol reduced token inflation from 5% to 2.5% in October 2025, bypassing a failed August community vote that lacked 66.67% approval.

- The change was enforced via a software upgrade requiring 80% validator adoption, triggering debate over governance integrity and developer authority.

- Critics like Chorus One warned of centralized precedents, while supporters argued the cut addressed unsustainable economic imbalances in the network.

- Market reactions were mixed, with NEAR's price dropping 8% amid broader crypto declines, though some analysts drew parallels to Bitcoin's halving effects.

- The controversy highlights tensions between pragmatic governance and decentralization ideals, raising questions about blockchain network accountability.

The

NEAR Protocol
has implemented a significant reduction in token inflation, cutting its annual supply increase from 5% to 2.5% on October 30, 2025, despite a failed community vote earlier in the year, according to
a Brave New Coin report
.

The inflation cut followed a complex two-stage voting process. Initially, a community vote in August 2025 failed to meet the required 66.67% approval threshold, with 89 validators (45% of participants) supporting the proposal, the Brave New Coin report said. However, the protocol's development team bypassed this outcome by embedding the change in a software upgrade (nearcore v2.9.0), requiring 80% of validators to adopt Protocol Version 81 for activation, according to

a Yahoo Finance story
. By October 28, 68.41% of validators had upgraded, meeting the threshold and triggering the change. This approach, defended by co-founder Illia Polosukhin as consistent with NEAR's five-year governance model, allowed the network to address a critical economic imbalance: spending $140 million annually on validator rewards while generating only $17 million in revenue since its 2020 launch, the Brave New Coin report noted.

The decision drew sharp criticism from major stakeholders. Chorus One, a staking provider managing $2.3 billion in assets, condemned the move as a "dangerous precedent," arguing it undermined governance integrity by allowing developers to override failed votes, the Brave New Coin report said. The company emphasized its opposition to bypassing community consensus rather than the inflation cut itself. Conversely, supporters like DWF Labs, which pledged to buy 10 million NEAR tokens if the proposal passed, framed the reduction as necessary for long-term sustainability, according to the same report.

The controversy highlights broader tensions in blockchain governance. While NEAR's House of Stake system aims to formalize economic decisions, the inflation cut's implementation through a validator upgrade process—distinct from its community governance vote—raised questions about authority and transparency. CTO Bowen Wang defended the approach, noting that economic parameters require consensus-layer approval to ensure network-wide alignment, the Brave New Coin report added. Meanwhile, critics warn that such flexibility could erode trust in decentralized governance models.

Market reactions were mixed. NEAR's price fell 8% to $2.10 post-announcement, though this mirrored a broader crypto downturn. Analysts remain divided on the long-term impact, with some drawing parallels to Bitcoin's halving events, where reduced supply inflation historically supported price appreciation, the Brave New Coin report observed.

As NEAR navigates this governance tightrope, the outcome could set a precedent for how blockchain networks reconcile economic pragmatism with decentralized principles. The debate underscores a persistent challenge in the crypto space: balancing the need for swift, effective decision-making with the ideals of decentralization that underpin many projects.