NEAR Protocol Advances with New Economic Proposals and Cross-Chain Innovations

Building on five years of mainnet success, NEAR Protocol is entering a new growth phase. The platform has facilitated multi-billion dollar volumes and achieved a fully sharded blockchain. In the past 30 days, over $1 billion in volume has flowed through NEAR Intents, its cross-chain transaction infrastructure. This system is also enabling the first-ever ZEC on Solana connection, known as Zolanear, which provides a cross-chain liquidity layer for privacy-preserving assets.

NEAR is preparing for significant upgrades, including the nearcore update, the launch of the House of Stake governance platform, and new AI products. These initiatives aim to enhance tokenomics, strengthen incentive alignment, and ensure sustainable growth. A three-part community proposal is being summarized to enhance NEAR’s economics, featuring a protocol upgrade and two reward programs.

The Evolution of NEAR Economics

NEAR’s original economic system was designed over five years ago to support its novel sharded blockchain architecture. Since then, the network has undergone significant upgrades, including a stateless validation security model. These changes have optimized gas prices and storage staking costs but also impacted validator incentives.

To address these challenges, NEAR is proposing a halving upgrade to reduce the maximum annual inflation from 5% to 2.5%. This change aims to create a more sustainable token model. The proposal requires 80% of block-producing validators to adopt it. Community feedback and an initial vote have shown strong support, with 91% in favor.

Additionally, NEAR is introducing two reward programs: HSP-002 to support smaller validators and HSP-003 to increase rewards for veNEAR holders. These initiatives are designed to ensure network decentralization and encourage governance participation.

Supporting Validators and Governance Participation

The HSP-002 proposal aims to support smaller validators by dedicating an annual budget of 100,000 NEAR. This support is crucial as validator rewards are expected to decrease by 50% following the inflation reduction. The program will operate on a quarterly cycle, with performance reviews to ensure alignment with network conditions.

HSP-003 proposes a 3-month rewards program for veNEAR holders to boost governance participation. The program offers an estimated annual reward boost of 4.2%-4.5% on top of staking rewards. This initiative aligns incentives for long-term commitment and active participation in the House of Stake governance.

NEAR’s efforts to enhance its economic model and governance structure are detailed here. These changes are set to strengthen NEAR’s position in the multichain economy and support its long-term growth.

Why This Matters: Impact, Industry Trends & Expert Insights

NEAR Protocol is advancing with significant economic proposals and cross-chain innovations, including halving its inflation rate and enhancing cross-chain liquidity.

A recent industry report highlights ongoing advancements in cross-chain technologies. These include zero-knowledge bridges and AI-powered transaction routing, which enhance interoperability and efficiency. This aligns with NEAR’s efforts to facilitate cross-chain liquidity, as seen in their Zolanear integration.

As per insights from CoinSpeaker, the NEAR Protocol’s proposal to halve its annual inflation rate is aimed at reducing token dilution and encouraging more on-chain participation. This supports NEAR’s strategic move to enhance its tokenomics and ensure sustainable network growth.

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