NEAR Protocol is a sharded Proof-of-Stake (PoS) chain with unique sharding technology and interoperability. Simply put, NEAR protocol is a Layer-1 network that uses sharding to achieve high Transaction Per Second (TPS).
NEAR uses a PoS consensus mechanism to secure and validate transactions on the blockchain. It consists of a permissionless base layer, an independent native currency, a predetermined monetary policy, and a marketplace of computing resources. NEAR is an open source, decentralized collaboration by a team of over ninety world class developers and researchers with a wide range of tech backgrounds.
From launch, NEAR has been built with focus on usability for both developers and users. Code is written in developer friendly languages like Rust and AssemblyScript. Gas fees are reliably low-cost and developers are incentivized by receiving 30% of all gas fees that they generate. NEAR also places a priority on delivering a smooth UX and more familiar process for the mass market of users that have yet to enter the market.
Some of the unique features of NEAR Protocol include:
Dynamic re-sharding (Nightshade) to achieve high TPS
EVM, Rust, And WASM compatible
Gasless EVM chain: Aurora
While sharding is not only unique to NEAR Protocol (Ethereum plans to implement sharding on the completion of Ethereum 2.0), NEAR is built on the concept of dynamic re-sharding. This means, instead of the number of shards being static, the network will be constantly rebased on the basis fn utilization. With dynamic re-sharding, NEAR can reduce the average cost of using the network while maintaining high transaction throughput.
NEAR’s Nightshade sharding technology and Doomslug Proof-of-Stake mechanism enables low transaction fees, ultrafast transaction times, and smooth horizontal scaling. With a one-second blocktime and two–three seconds finality, NEAR is significantly faster than Ethereum (14s blocktime and 5min finality).
“In Nightshade we model the system as a single blockchain, in which each block logically contains all the transactions for all the shards, and changes the whole state of all the shards. Physically, however, no participant downloads the full state or the full logical block. Instead, each participant of the network only maintains the state that corresponds to the shards that they validate transactions for, and the list of all the transactions in the block is split into physical chunks, one chunks per shard.”
NEAR Rainbow Bridge will allow existing Ethereum users to seamlessly migrate their assets to NEAR's ecosystem with ease. In the first phase of this process, users will be able to bridge ERC-20 tokens they wish. There are plans to incorporate other chains like Fantom, Binance Smart Chain and Polygon.
As of December 2021, there were over 400 total developers building within the NEAR ecosystem (6th most behind only Bitcoin, Ethereum, Solana, Polkadot, and Cosmos). This was a 400+% increase from about 100 developers in December 2020. NEAR Protocol also uses a delegated proof-of-stake (PoS) mechanism, similar to what other blockchains like EOS, TRON, COSMOS are using. For nodes who want to become a validator, they will need to stake the $NEAR tokens to participate in the validation process. The table below compares the NEAR Protocol with her peers like SOLANA, POLKADOT and AVALANCHE.
NEAR has several incentives that makes it a fundamentally attractive investment. At the end of January 2022, they closed a $150 million round of funding led by Three Arrows Capital, Alameda, and Jump, as The Block reported at the time. NEAR Protocol recently raised an additional $350 million in a funding round led by Tiger Global, with participation from Republic Capital, FTX Ventures, Hashed, Dragonfly Capital, ParaFi Capital, Blockchange Ventures, and MetaWeb Ventures. According to the NEAR medium page, ‘this fundraise includes crypto-native funds as well as a notable move into crypto and the NEAR ecosystem from more traditional firms’.
Tiger Global adds to the stellar list of VC behemoths supporting the NEAR ecosystem. According to Messari, NEAR is the third most commonly held asset by crypto funds as of Q3 2021.
NEAR is rumoured be listed on Coinbase in the next couple of months, which will likely help drive retail visibility. This also paves the way for NEAR NFTs to be integrated into Coinbase’s upcoming NFT marketplace.
On April 20th 2022, NEAR is rumoured to announce the launch of her own native algorithmic stablecoin $USN in partnership with other well capitalized stablecoins. They intend to offer an attractive 20% APR, this will further attract DeFi capital rotation into the NEAR ecosystem, thereby soaking up the total value locked (TVL) from other alternative L1 protocols.
This will lead to a comparison of NEAR to Terra ($LUNA) as the narrative for attractive stablecoin yields escalate. Terra currently has a market capitalization of about $40 billion while NEAR sits at $10 billion. These incentives will further strengthen NEAR’s fundamentals in both the short and long term and likely cause its market capitalization to appreciate.
NEAR currently does not have a very large user base, this can be partially explained by NEAR’s go-to-market strategy of focusing on building best-in-class technology first before allocating time and resources towards generating hype to draw users to the ecosystem.
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