NEAR Protocol co-founder Illia Polosukhin has introduced a proposal for a new treasury structure designed to reshape how the blockchain funds network security and ecosystem development.
The proposed NEAR Sovereign Fund would combine the protocol’s existing treasury assets with future revenue streams, invest those assets to generate yield, and use the returns to support validators, infrastructure providers, and public goods across the ecosystem.
The proposal comes as NEAR approaches the sixth anniversary of its mainnet launch. Polosukhin described the network’s first several years as a “bootstrapping phase,” arguing that the protocol has reached a stage where it can explore a more sustainable economic model built around productive treasury management rather than continued reliance on token inflation.
Under the proposal, NEAR would gradually shift some of the responsibilities currently funded through newly issued tokens toward revenue generated by the fund.
However, the plan remains a community discussion at this stage. No governance vote has approved the Sovereign Fund, and any changes to NEAR’s monetary policy would require further review, community participation, and milestone-based implementation.
Fund Would Use Treasury Assets to Support Security and Public Goods
The NEAR Sovereign Fund would bring together the protocol’s existing treasury holdings and future ecosystem revenue. According to the proposal, these revenues include transaction fees, subscription-based services, and payments connected to NEAR’s artificial intelligence initiatives.
Unlike traditional sovereign wealth funds that generally invest government revenue into diversified assets such as equities or bonds, the NEAR proposal focuses on using the network’s native token as the foundation of the fund.
The concept is to deploy NEAR holdings across decentralized finance applications and other ecosystem opportunities to generate returns. Those returns could then be directed toward essential network expenses, including validator support programs, multi-party computation (MPC) infrastructure providers, and other services required for the ecosystem to operate.
Related: USDC Goes Live on NEAR AI Agent Market With Private Payments
One proposed use case is the Validator Support Program, which would provide smaller validators with predictable compensation rather than relying entirely on inflation rewards. The goal would be to improve validator sustainability while reducing dependence on new token issuance.
The proposal reflects a broader discussion taking place across proof-of-stake blockchain networks. Many networks use inflation as a mechanism to reward validators and maintain security, but critics argue that excessive issuance can create long-term pressure on token economics.
Polosukhin’s argument is that a productive treasury could eventually allow NEAR to separate network security from inflation.
NEAR Explores Path Toward Lower Inflation and Potential Fixed Supply
A major part of the proposal focuses on the possibility of reducing and eventually eliminating new token issuance if the Sovereign Fund becomes large enough to cover security costs.
Polosukhin argued that simply burning treasury tokens would not create a sustainable economic model. While token burns can reduce supply temporarily, they do not create an ongoing source of funding for validators or ecosystem services.
Instead, he suggested that putting treasury assets to work could generate continuous returns. Using a hypothetical example, Polosukhin noted that deploying assets to generate yield could provide recurring financial support, while a one-time supply reduction would only create a temporary effect.
The proposal compares this approach with long-term sovereign investment models, referencing funds such as Singapore’s sovereign wealth fund and Norway’s government investment fund, which have grown through decades of compounding returns.
For NEAR, the objective would be a gradual transition. As the Sovereign Fund generates more revenue, the protocol could reduce the amount of validator rewards funded through inflation and increase the share supported by treasury returns.
This would not happen immediately. Proof-of-stake networks depend on reliable validator incentives, and any reduction in emissions would need to ensure that network security remains strong.
The proposal also acknowledges that Bitcoin itself still relies on block rewards, although its issuance schedule decreases over time. NEAR’s proposed model would represent a different approach: using treasury productivity as a potential replacement for inflation.
The next phase depends on governance discussions involving validators, token holders through NEAR’s House of Stake framework, and the broader community. Any implementation would require agreement on issues such as fund management, transparency requirements, risk controls, and oversight.
For NEAR holders, the key factors to monitor will be whether the Sovereign Fund can generate consistent returns, how governance safeguards are designed, and whether the transition away from inflation can happen without compromising network security.
If successful, the proposal could represent a significant experiment in blockchain economics: moving from an inflation-funded security model toward one supported by a self-sustaining treasury.
About The Author
