We built not for the peak, but for the valley. That line has guided me through every fork, every bear market, every governance war I’ve witnessed in this industry. It came back to me last week when the NEAR Foundation confirmed that its on-chain House of Stake had passed proposal HSP-027, quietly scrapping the developer gas rebate that had been a cornerstone of the protocol’s incentive design since its sharded inception. On the surface, this is a technical adjustment—a simple re-routing of fee flows from four years of accrual logic to a single burn address. But for anyone who has spent time auditing the moral economy of Layer 1s, this vote is a seismic shift in what we reward when we build.
Context: The Shard That Shared
NEAR Protocol launched in 2020 with a promise that resonated deeply with the idealistic wing of the crypto community: scalability through sharding, but with a human face. Its tokenomics included a developer gas rebate—a mechanism that returned a portion of the gas fees generated by a smart contract to its deployer. This was not an accident. It was a deliberate attempt to align the incentives of builders with the health of the network. In my early days as an analyst in Singapore, I audited projects that made similar promises on paper but delivered nothing but rent-seeking. NEAR’s rebate was different; it felt like a covenant between the protocol and its creators: you build the shard, we share the fee.
But covenants age. By late 2024, with the market grinding through a bear that tested every foundational assumption, the economics of that promise began to look fragile. The rebate was a net outflow from the protocol’s treasury equivalent—it reduced the burn rate of NEAR tokens, meaning less deflationary pressure on the supply. The House of Stake, composed largely of validators and large delegators, started asking a question that echoed through every governance forum: "Why are we subsidizing developers with a mechanic that dilutes holders?" The result was HSP-027, a proposal to eliminate the rebate entirely and send 100% of gas fees to the burner.
Core: The Arithmetic of Alignment
Let me be clear about what this change does and does not do. Technically, it is trivial. The code modification is likely a single constant change in the gas fee distribution module—redirecting the developer’s portion from a contract-specific sub-account to the burn address. There is no new consensus logic, no shard rebalancing, no performance hit. The NEAR network will continue processing transactions at the same throughput, with the same finality. The user experience is unchanged; gas prices per transaction remain identical.
The entire impact is in the token supply schedule. Before HSP-027, a transaction costing 0.01 NEAR in gas might have sent ~0.003 NEAR to the developer, ~0.004 NEAR to validators, and ~0.003 NEAR to the burn address. Now, that same transaction burns the full 0.01 NEAR (minus validator rewards, which are unchanged). In a network with 10 million daily transactions averaging 0.01 NEAR each, that shift means an additional 30,000 NEAR burned per day—roughly 11 million NEAR per year. At current prices, that is tens of millions of dollars of net buying pressure redirected from builders to holders.
From a tokenomics perspective, this is undeniably bullish for the NEAR token itself. The protocol’s ‘real yield’—the value captured by holders via deflation—increases overnight. In a market starved for yield and skeptical of inflationary L1s, NEAR gains a narrative edge: it now burns a higher percentage of its fee revenue than Solana, Avalanche, or even Ethereum (post-Merge, prior to proto-danksharding adjustments). During my time building The Alignment Circle in 2024, I watched dozens of projects struggle to justify their token value. NEAR’s move gives it a defensible arithmetic: more scarcity per unit of activity.
But arithmetic is not ethics. And this is where the alignment gets complicated.
Contrarian: The Cost of the Covenant
We don’t need more users; we need more stewards. That signature has become my litmus test for every governance decision I analyze. The question we must ask about HSP-027 is not whether it benefits NEAR token holders—it clearly does—but whether it strengthens the community of stewards who will maintain and evolve the network.
The developer gas rebate was a form of direct revenue for builders. For small-scale DApp developers, especially those building on NEAR’s unique sharded architecture (which requires more initial learning than an EVM clone), the rebate could represent a meaningful portion of their operational runway. A simple NFT marketplace might generate $500 per month in rebates—not life-changing, but enough to cover server costs or a junior developer’s stipend. Scrapping that revenue sends a signal: the protocol prioritizes holder returns over builder sustainability.
I have seen this playbook before. In 2022, during the burnout that drove me to a cabin in Yilan, I watched a promising L1 pivot its fee model to maximize burn. The immediate price pump was real. But over the next six months, that chain lost 15% of its active developers—not because they were greedy, but because they felt the covenant had been broken. Builders are not mercenaries; they are missionaries. When you remove their direct stake in the protocol’s economic cycle, you erode the very trust that sustains long-term development.
Trust is the only protocol that cannot be coded. NEAR has one of the most technically sound teams in the industry, led by Illia Polosukhin and a group of researchers who understand sharding better than anyone. But governance is not just code; it is social contract. By passing this vote without an accompanying developer compensation package (such as a retroactive grant program or increased network-funded grants), the House of Stake may have traded short-term token scarcity for long-term developer loyalty.
I want to be careful not to overstate the risk. NEAR still has a strong treasury and a culture of active community grants. The proposal was debated publicly, and many developers themselves supported it—understanding that a healthier token price eventually benefits everyone. But the contrarian view is that deflationary mechanics are not universally virtuous. They can become a form of rent extraction from creators to capital providers, undermining the very decentralization we claim to champion.
Takeaway: The Valley Ahead
We built not for the peak, but for the valley. The valley we are entering now is one where every protocol must choose between two paths: maximizing holder value or maximizing builder participation. Neither is inherently wrong, but they are in tension. NEAR has chosen a path that leans toward the former. The next six months will reveal whether that choice strengthens or weakens its community.
My advice to those watching this development is to monitor two signals. First, track NEAR’s daily gas consumption—available through any block explorer like NearBlocks. If the burn rate increases without a corresponding drop in transaction volume, the move is net positive. Second, watch the developer migration data. If we see core DApps like Ref Finance or Burrow announcing migration plans to other L1s, that is the canary in the shard.
As for me, I find myself grateful that the governance process worked. A proposal was made, debated, and executed. That alone is more than many L1s can claim. But I am also reminded that the most important decisions are not about code—they are about trust. And trust is rebuilt every day, not just on voting day.
The valley is long. We need stewards who will walk through it, not just holders who count the burn at the summit.