NEAR Protocol co-founder and Foundation CEO Illia Polosukhin proposed on August 4 that the protocol establish what he calls a "protocol sovereign fund," a permanent investment reserve designed to generate returns that sustain the network indefinitely. The proposal, first reported by The Block, would move NEAR away from its current reliance on grant cycles toward a self-replenishing capital model similar to those used by state sovereign wealth funds and large university endowments.

The concept draws directly from real-world precedents. Norway's Government Pension Fund Global, the world's largest sovereign wealth fund at over $1.9 trillion in assets, converts surplus oil revenues into diversified global equity positions that fund national priorities across generations. The fund also carries indirect exposure to approximately 7,161 bitcoin through equity stakes in public companies, a position that grew 192.7 percent year over year. Singapore's GIC and Temasek have made similar moves into digital asset infrastructure. On the endowment side, Harvard and Brown universities have recently added Bitcoin and Ether ETF positions as institutions grapple with compressed returns from traditional portfolios. As one W.K. Kellogg Foundation executive put it: "If you don't earn returns of 8%, the model doesn't work."

The proposal arrives at a moment when NEAR's tokenomics have shifted significantly in the protocol's favor, and when the full picture of underlying revenue makes the urgency plain. NEAR's total protocol revenue since its 2020 launch stands at only $17 million, a figure that illustrates why the grant-dependent model is under structural strain. In October 2025, the protocol permanently halved its annual inflation rate from 5% to 2.5%, cutting new token issuance from roughly 64 million to 32 million NEAR per year (worth approximately $39.3 million at current prices). In February 2026, the protocol began routing 100 percent of fees from NEAR Intents, its cross-chain transaction layer, into open-market NEAR purchases. That buyback mechanism becomes net deflationary once Intents volume reaches $177 million per day. The trailing 90-day average currently sits at around $77 million daily, with cumulative all-time Intents volume exceeding $24 billion across 25 million swaps. NEAR trades near $1.66 to $1.89, giving the protocol a market cap of roughly $2.2 to $2.3 billion against a circulating supply of about 1.3 billion tokens.

Polosukhin's longer strategic rationale frames the fund as something more than financial housekeeping. His central 2026 thesis holds that the primary users of blockchain will be AI agents, not humans. A protocol that anticipates machine-scale adoption needs capital infrastructure that outlasts grant cycles.

A July 2026 mainnet upgrade (v2.13.0) introduced quantum-resistant signatures, dynamic resharding, and a new gas key system. A forthcoming upgrade called SPICE is set to reduce block times from 600 milliseconds to 200 milliseconds. Institutional access is also expanding: Bitwise has filed for a NEAR staking ETF under the ticker NRR, with a proposed structure that would allow the fund to stake up to 100 percent of its holdings, a design that signals institutional appetite for NEAR staking returns and is directly relevant to the sovereign fund's yield-generating ambitions. A NEAR staking ETP already trades on Deutsche Börse with approximately 28.3 million euros in assets under management.

Polosukhin has been skeptical of simpler fixes. When a token burn proposal circulated in July 2026, he argued that "a one-time burn is a blunt instrument" that fails to address underlying supply-and-demand dynamics, pushing instead for structural mechanisms with lasting effect. The NEAR Foundation already holds a 100 million NEAR endowment representing 10 percent of the initial token supply, with half locked for long-term release, and has distributed more than $45 million in grants to over 800 projects. The proposed sovereign fund would operate separately from this existing reserve, functioning more like an active investment vehicle than a grants pool.

The proposal does not arrive in a politically neutral environment. An August 2025 governance forum post called on Polosukhin to step down from either his Foundation Council seat or CEO role, citing what critics described as "overlapping influences on NDC elections, HOS proposals, validator emissions, tokenomics, protocol upgrades, and fund management." A community vote on a protocol upgrade that same year failed to reach the required 66.67 percent threshold at 45 percent support, and the development team subsequently proceeded with the upgrade regardless.

That episode left unresolved questions about accountability that now hang over any proposal involving centralized capital management at the protocol level. Separately, a private corporate entity called SovereignAI Services LLC, backed by a $120 million PIPE (Private Investment in Public Equity) investment into OceanPal (NASDAQ: SVRN), and chaired by Polosukhin on its advisory board, is pursuing its own plan to acquire at least 10 percent of the NEAR token supply. That is a distinct initiative from the protocol-level proposal, but the overlap in leadership has drawn notice.

For developers and communities outside the United States, the stakes around governance structure are concrete. India's Ministry of Electronics and Information Technology launched the Blockchain India Challenge in February 2026, a central government initiative that has accelerated state-level adoption already under way. States including Andhra Pradesh, Telangana, and Tamil Nadu are running active blockchain pilots across land records, education, and real estate, with NEAR's sub-cent transaction fees and Rust-based smart contracts drawing developer interest. A protocol sovereign fund could theoretically provide long-term, non-cyclical funding for regional builders without subjecting them to grant-round uncertainty.

In Africa, ADI Chain, the first institutional blockchain for stablecoins and real-world assets in the MENA region, built in partnership with First Abu Dhabi Bank and IHC, extended its reach as NEAR's Layer 2 network by partnering with M-Pesa in January 2026 to bring blockchain infrastructure to more than 60 million monthly users across Kenya, DR Congo, Egypt, Ethiopia, Ghana, Lesotho, Mozambique, and Tanzania. Analysts suggest that fee revenues from deployments at that scale may take years to become material in low-fee environments, and that a sovereign fund structure could bridge the funding gap without repeated grant applications.

Whether regional teams will have meaningful representation in how such a fund is governed remains an open question, and it is likely to be the central one as the proposal moves toward community deliberation. As of publication, no vote date has been announced and no formal governance document appears to have been published.