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What is Near Protocol (NEAR): Designed to accelerate DApps

Summary

  • NEAR is an open-source, smart-contract-enabled blockchain platform designed to accelerate the development of decentralized applications. It is built on the NEAR protocol, which is a developer-friendly, sharded, public blockchain.
  • NEAR seeks to prove that decentralized networks can be scalable, secure, and have a trustless consensus.

near-protocol

Smart contracts have opened up a new world for economic applications on blockchain-based platforms. Introduced and popularized by the Ethereum blockchain, smart contracts have become almost synonymous with blockchain applications, which allow network participants to deploy and run financial application code on decentralized infrastructures.

Since Ethereum’s launch in 2015, there has been a steady inflow of new smart contract-based platforms. This is in part due to rising gas fees and congestion on the Ethereum blockchain. Even though Ethereum 2.0 has officially launched its beacon chain, scaling solutions like sharding and rollups are yet to be implemented.

What is the Near Protocol?

The NEAR protocol entered the blockchain space at a crucial moment. While most promising solutions deliver on only one or two aspects of the blockchain trilemma, NEAR seeks to prove that decentralized networks can be scalable, secure, and have a trustless consensus.

NEAR is an open-source, smart-contract-enabled blockchain platform designed to accelerate the development of decentralized applications. It is built on the NEAR protocol, which is a developer-friendly, sharded, public blockchain. It seeks to address the limitations of older systems through its unique scaling solution known as “Nightshade” and a new powerful consensus mechanism. It is a faster, user-friendly platform with significantly reduced development and end-user costs.

What is the “NEAR Collective”?

According to the NEAR team, it takes 5 minutes to build an application on the platform. NEAR is run by a rather unconventional team known as the “NEAR Collective,” a global community of industry experts in research and development united by their collective goal to craft this massive project. Their primary mission is to maintain the platform’s usability for developers and end-users while improving scalability and promoting DApp development.

The Collective is backed by some of the most influential people in the cryptocurrency space, and its team of extraordinary programmers has built one of the most intricately designed sharded blockchains in the world. It has an open membership policy, which enables anyone in the world to contribute to the project and aid in its development.

History of the Near Protocol

Before it was transformed into a blockchain development platform, NEAR was initially developed as a machine learning platform, NEAR.ai, created by Illia Polosukhin and Alexander Skidanov in 2017.  Named after the science fiction novel The Singularity is Near, the platform was made to explore program synthesis, automating programs from a human specification.

During their research into program synthesis, the team discovered smart contracts and cryptocurrency payment platforms, compelling them to explore deeper. After numerous attempts to work with various blockchain protocols, they concluded that the technology available in early 2018 couldn’t match their requirements. The NEAR Protocol wasn’t born to meet some market demand, they made it out of necessity.

In August 2018, Illia and Alexander began collaborating with a team of experts to build the NEAR protocol. Throughout development, their main vision was to offer both end-users and developers an intuitive platform to build decentralized applications on and scale them for mass use.

It is for this reason that NEAR opted for a Proof-of-Stake consensus algorithm for transaction verification and block production. After a year of performing test runs, NEAR officially launched in April 2020, with the network becoming community-operated by September.

The four pillars of NEAR

Usability, scalability, simplicity, and sustainable decentralization are the four pillars that hold up NEAR’s broader economic design. Every component of the NEAR system is made to be as intuitive and straightforward as possible, and its economy is highly optimized so both end-users and developers are guaranteed to have the smoothest experience. The platform also provides excellent network security and ecosystem development support.

Scalability is practically ensured through its sharding system, where the chain is split into an unlimited number of subchains operating in parallel. NEAR’s horizontal scaling approach, combined with its new “Doomslug” consensus mechanism makes this a compelling and versatile DApp development platform.

Each parallel blockchain or “shard” is maintained by a network of allocated validator nodes. This division of labor ensures a dynamic distribution of computation work, raising the network’s processing capacity. Essentially, this makes NEAR exceptionally quick, with reports suggesting the blockchain is capable of processing over 100,000 transactions each second.

At those speeds, NEAR enters the territory of what Ethereum 2.0 promises to bring. NEAR also believes the platform will have transaction fees 10,000 times cheaper than Ethereum, and with congestion regularly driving up costs on the Ethereum network, the platform could quickly become a serious contender against the original smart contract platform.

NEAR is a treat for developers to work on, and thanks to its “common sense onboarding” is one of the most approachable networks in the blockchain space. Not only does it offer a wide range of modular components to fast-track project development on the network, but the protocol also offers a myriad of additional features such as browser-based debugging, the use of more popular programming languages like AssemblyScript and Rust, and even contract rewards.

What is the NEAR Token?

The NEAR token ($NEAR) is the platform’s native currency. NEAR’s economy is built around utility tokens and the NEAR token acts as the core medium of exchange on the network.

What is the NEAR token used for?

It is used primarily by two groups of people. The first is application users who pay to use DApps, and the second is validators and delegators.

Since NEAR is completely permissionless, anyone can validate transactions on the network to earn transaction fees. Besides accessing applications on the platform, token holders can also participate in network governance and even earn rewards by staking their tokens. Staking is where users lock tokens into a smart contract to earn interest, and the penalty for validators caught involved in malicious network activity is having their stake slashed.

How do you get NEAR tokens?

The three main ways of obtaining NEAR tokens are earning them, buying them, or asking a friend for some. People can earn NEAR tokens by participating in development bounties, winning NEAR hackathons, running NEAR development communities, and just being active members of the network. Users that already have tokens can earn more by staking them and running a validator node.

NEAR is also traded across most major exchanges, but people can also ask their friends for some NEAR tokens using the “NEAR Drop” feature, which doesn’t necessarily need a NEAR account to operate.

The fee paid for every transaction in a block is divided into two parts. One portion is paid to the developer for deploying the smart contract, and the remaining portion of the fee is burned. NEAR deploys a block-rewards-with-burn model, which means that the rate of burned tokens can exceed the rate of minting new ones during extended periods of high network usage. This means the network will become deflationary, with the supply of tokens reducing over time.

A Community-Driven Cryptocurrency

The NEAR token ICO took place on CoinList in August 2020, 5 months after it was launched, with one billion NEAR tokens having been created at genesis earlier in April. About 12% of these initial tokens raked in $33 million before the final phase of NEAR’s mainnet rollout later in October. The following chart represents their remaining allocation distribution.

near token distribution

(Source: https://near.org/blog/near-token-supply-and-distribution/)

The NEAR network has six primary stakeholder groups: validators, who run nodes to provide computational resources and security, developers, who build the applications that run on the network, and end-users, who use the network applications, are the primary stakeholders. Other stakeholders include the NEAR Foundation, which coordinates NEAR’s governance and technical developments, token holders, and third-party observers. Though these groups are all subject to the same rules imposed by the network, the economic policies that govern NEAR can have differing impacts on each of them.

As a community-governed platform, NEAR is always open to suggestions from the community, empowering users with sufficient voice and vision. All key stakeholders, including token holders, validators, developers, and community leaders can participate in the on-chain governance of the platform.

On NEAR’s governance forum, participants can opt to submit improvement proposals, and on receiving enough support from the community, the development teams at NEAR start working towards adopting the proposal. The NEAR Enhancement Proposals repository on Github is another place for users to submit their suggestions.

However, distributed representation induces a lot of bottlenecks and could hinder the protocol’s growth in the long run. It requires people to discuss, debate, and deliberate on every decision, which can be a prolonged process depending on the decision. In order to ensure an efficient decision-making process, a qualified entity known as the “Reference Maintainer” is selected to oversee the community’s governance.

Not NEAR, but Not Far Either

The NEAR Grants Program is also helping to facilitate the development of more projects on the NEAR ecosystem. It provides funding and resources to NEAR projects and is administered by the NEAR Foundation. Its mission is to promote development on the platform by supporting the NEAR ecosystem. It does this by providing financial and technical resources to teams looking to build on the network.

Within just a few months after launch, many projects have already started building on the platform, including Flux, a decentralized open-market protocol, Mintbse, a platform for buying and selling NFTs, and Paras, an NFT marketplace for high-quality works from select artists.

Furthermore, NEAR recently released Rainbow Bridge, the first fully trustless Ethereum to NEAR bridge. This will let developers leverage all the smart contract applications and assets Ethereum offers from within NEAR. It is a universal, completely trustless protocol that’s utterly devoid of centralized authorities.

This is a significant step towards making blockchain interoperability a reality and making DApps more accessible to everyone. The bridge also aims to connect to other chains within the DeFi ecosystem in the future.

Aurora, an Ethereum Layer-2 protocol, was also recently launched on the NEAR network, which allows users and developers to run Ethereum-based applications on top of NEAR. Combining the Ethereum Virtual Machine (EVM) with a powerful cross-chain bridge creates a seamless user experience and allows developers to re-deploy their Ethereum apps on NEAR within minutes without making any significant changes. In addition, transaction fees on Aurora are around a thousandth of the fees on Ethereum.

Since NEAR is a community-driven protocol, there is no clear roadmap for what’s next. According to NEAR, they are working to ensure the technology is appropriately implemented and kept open-source so anyone in the world can interact with the network, propose changes, and modify its code.


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