NEAR Protocol was founded in 2018 as a proof-of-stake (PoS) blockchain with unique sharding technology and multi-chain interoperability.
And it’s picking up some serious attention.
Just a few days ago, it raised a US$350 million investment, led by Tiger Global.
And Grayscale has announced that the NEAR token is its third-largest holding.
So, what’s all the fuss about? With that in mind, it might be a good time to look into NEAR Protocol a little deeper.
Let’s dive in!
TL;DR:
- Innovative sharding.
- Unique Rainbow Bridge boosts interoperability.
- Fast-growing developer community.
- Major backers.
NEAR Protocol is a delegated proof-of-stake, smart contract Layer-1 blockchain which is extremely fast, simple, scalable, green and interoperable, whilst at the same time being community-based and developer-friendly.
Source: https://near.org/founders/
NEAR Protocol is governed by holders of its native token, NEAR.
Its sharding method is one of the reasons it stands out.
Nightshade
NEAR’s sharding technique is called Nightshade.
Sharding is a technique which splits the network’s infrastructure into several segments so that computers, also known as nodes, only have to handle a fraction of the network’s transactions. It allows a blockchain to scale sideways, more efficiently, while enabling higher transactions per second (TPS), as well as lower transaction fees.
Nightshade allows NEAR Protocol to maintain a single chain of data, while distributing the computing required to maintain this data into chunks. These chunks are handled by nodes, which process the data and add the information to the main chain.
One of the main benefits of Nightshade is that its architecture allows for fewer potential points of failure when it comes to security, as participating nodes are only responsible for maintaining smaller sections of the chain.
Every block produced on NEAR contains a snapshot of the transactions occurring on each shard. Each shard is maintained by its own allocated network of validator nodes.
These shards all work in parallel.
Overall, the design allows NEAR to process around 100,000 transactions per second.
DoomSlug and Validators
The speed of NEAR’s transactions is improved by NEAR’s block production algorithm known as DoomSlug. It allows different validators to take turns producing different blocks in accordance with the amount of NEAR tokens they have staked.
Each shard consists of 100 validator spots. Validators need to stake a certain amount of NEAR tokens to gain their spot in the shard, an amount that is proportional to the total amount of tokens staked in that shard.
For example, if the total amount staked in the shard is 1 million NEAR tokens, then a validator would need to stake 1/100th of that amount to get a seat, in this case, 10,000 NEAR tokens.
If the validators don’t have that amount of tokens, they would need to seek a shard with fewer staked NEAR. This in turn incentivizes validators to expand out and grow the network of shards.
However, delegator staking pools exist, allowing users with fewer tokens to join a shared pool which is then used to create the amount needed to join the larger shards.
Block rewards are generated through inflation – aka more tokens released into the ecosystem over time. The inflation sits at 5%, and block rewards are distributed every 12 hours.
To incentivize network participation and ensure good behavior, validators are severely punished by having their staked NEAR tokens slashed if they produce malicious blocks or misbehave. However, validators are able to unstake at any time.
As a result, finality can be reached much faster and with fewer validators than other Layer-1 chains, which tend to use Byzantine Fault Tolerance (BFT) consensus algorithms.
Source: https://twitter.com/nearweek?s=21
Rainbow Bridge
NEAR Protocol is interoperable with Ethereum via its Rainbow Bridge: A trustless bridge where you can transfer ERC-20 tokens and non-fungible tokens (NFT) between the two blockchains and Aurora’s EVM layer. Aurora is an Ethereum Virtual Machine (EVM) implemented as a smart contract on NEAR Protocol, that allows the execution of Ethereum contracts in a more efficient environment.
In order to move tokens from Ethereum to NEAR Protocol, a user must first deposit their tokens to an Ethereum smart contract. These tokens are then locked up in the contract, and new tokens are created on NEAR’s platform representing the original ones.
Since the original funds are held in storage through the smart contract, the process can be reversed when the user wishes to retrieve their original tokens.
The total value locked (TVL) on Rainbow Bridge is growing fast, approaching US$1.6 billion, a 103% growth week-on-week.
Team
NEAR was founded in San Francisco during the 2018 bear market. Despite this, they managed to raise US$50m in their first four months, before anything had been built.
This is potentially due to the great minds of the two co-founders behind it.
Firstly, Illia Polosukhin, a former engineering manager of the Google research division that led deep learning and natural language technology, which are both used today in Google’s translation services. He has had massive success in his career to date, and on a more humanitarian side, he recently helped move at least 50 people out of the conflict-hit country of Ukraine, as well as raise more than US$3 million to pay for medicine, food and evacuation efforts.
And secondly, we have Alex Skidanov, a former Microsoft software developer. Prior to this, Alexander also has worked with OpenAI as a research engineer consultant.
The team is ever-expanding, so if you want to see the open positions, go to the career section of their website here.
Tokenomics
Over 66% of the total supply of NEAR tokens is already in circulation.
It currently has a market cap of US$12,475,403,918 and a fully diluted market valuation not too far away, at US$18,783,077,880.
There is a 1 billion token maximum supply, and the inflation rate sits at 5%.
The token distribution is as follows:
Source: https://near.org/blog/near-token-supply-and-distribution/
NEAR’s marketcap is low compared to other chains, which could prove to have massive upside potential. However, in recent days, and with Grayscale announcing that NEAR is their third-largest holding, after Bitcoin and Polkadot, the price has been on the rise, up 20% at time of writing.
And NEAR’s overall TVL has been on the rise, with it up over 100% for the month.
https://defillama.com/chain/Near
Ecosystem
The NEAR ecosystem is growing at a fast pace, with 485 projects being built on NEAR as of writing.
If you want to check them all out, head over to AwesomeNear.
Source: https://near.org/
Developers
The NEAR website offers many ways for developers to enter the NEAR ecosystem. Anyone who wants to learn can take advantage of:
NEAR University – Where you can learn, earn, connect, and get certified among friends, whilst tracking your progress along the way.
NEAR Academy – Where you’ll learn the basics of blockchain technology through a series of small hands-on challenges using NEAR Protocol.
NEAR Certified Developer – Where you can get paid to join a 5-day part-time course and learn to design, develop, test and deploy smart contracts on NEAR.
Certificates are minted as NFTs on the NEAR blockchain.
And that’s not all, there is much more to explore on the learning section of the NEAR website. Go check it out here.
Developer activity is on the rise. And you know what we always say at Crypto Banter: follow the developers. Other than the obvious high-caliber projects building on NEAR, the above learning resources might be driving new developers to the space too.
Institutional adoption
We always say that following the smart money is a good move.
As mentioned, Grayscale announced that NEAR is their third-largest holding, whilst John Curtius, a partner at Tiger Global, which recently led the US$350m investment round, stated:
“NEAR is poised to be a leading smart contract blockchain platform, combining first-rate technology with a fast-growing developer ecosystem. We’re excited to support NEAR as we ramp up our investments in the digital asset space,”
And looking at the entire list of NEAR’s backers, we can see a lot of smart investors with deep pockets.
Source: https://near.org/backers/
Banter’s take
The hype is real. The fear of missing out (FOMO) is building. And of all the major Layer-1s, this could still be extremely undervalued. NEAR’s combination of cutting-edge tech, community-focus, and developer-friendly approach makes it a hot prospect (hence the huge backers and serious capital raises).
Should you FOMO in? We’d urge patience. With NEAR approaching all-time highs, some kind of pull-back is likely, especially if the rest of the market sees some downside action in the coming weeks. If you want to get some exposure, make sure you plan your entry!
