$NEAR project co-founder Ilya Polosukhin has published a proposal on the official forum to create a protocol sovereign fund. It is intended to support ecosystem development through targeted funding.
In his post, Polosukhin highlighted the work done to ensure the project's sustainability: reducing inflation, the mechanism for redistributing $NEAR Intents fees into $NEAR buybacks, and launching AI-inference staking.
Earlier we examined in detail the direction this project is moving in:
Polosukhin believes that creating a sovereign fund is the natural next step. As examples, he cited countries like Singapore and Norway: their sovereign funds use revenues from cyclical sources — oil, land sales — to invest in income-generating assets, and the profits are used for state needs while preserving the fund's "principal."
According to Polosukhin, today, the security of most L1 blockchain networks, including $NEAR, is paid for through inflation — that is, the constant minting of new tokens, which dilutes the share of non-staking holders.
The sovereign fund is designed to gradually replace this model: instead of paying validators directly from issuance, the investment income from the fund will cover security costs and other network public goods, while simultaneously allowing for a reduction in inflation.
Polosukhin separately explained why this particular approach was chosen over simple token burning: burning only temporarily compensates for inflation and does not create a permanent source of funding, whereas funds invested in yield-generating protocols continue to generate income for the ecosystem.
How the initiative will be implemented
It is assumed that the sovereign fund will gain control over the project's treasury, as well as future protocol revenue. At the initial stage, its balance will hold about 30 million $NEAR — at the current exchange rate, this is approximately $50 million.
Subsequently, the fund will buy $NEAR with incoming revenue and place assets in yield-generating protocols. The generated profit is planned to be directed towards supporting the ecosystem — in particular, the validator support program and paying MPC providers.
An important nuance: unlike classical sovereign funds, which typically hold liquid fiat assets, the $NEAR fund will hold the $NEAR token itself — this adds an additional risk to the model, which Polosukhin expects to compensate for by diversifying the methods of generating yield.
Over time, the fund's "principal" will grow through additional allocations — both from protocol revenue and gradually from issuance. In theory, this could eventually allow $NEAR to transition to a fixed token supply model. $NEAR holders will also be able to participate in the fund's yield through the existing delegation mechanism in the House of Stake.
This is the first phase of the initiative: Polosukhin emphasizes that the launch will be phased, with checkpoints to verify the model is working before more funds are directed to the fund.
The $NEAR co-founder invited ecosystem participants to discuss the initiative over two weeks, stressing that this is a proposal, not a final solution — the final parameters of the fund are to be developed by the community, including validators and token holders via the House of Stake.
