Blockchain means decentralization in the purest form. The idea of a decentralized world was born after the birth of Bitcoin which was further enhanced by Ethereum in 2014 when it launched Ethereum blockchain with the capability of smart contracts & DAPPS.
Such projects have been widely accepted and appreciated by the developer’s community. However, they lagged one critical aspect i.e mainstream adoption. The complexity of operating and using blockchains like Ethereum and similar projects i.e Avalanche Crypto (AVAX) etc has kept the users away from this amazing technology.
Near protocol wants to bridge this gap and bring the technology mainstream by simplifying its system design while making the blockchain more usable, scalable & secure at the same time. Will it be able to deliver its promise? Let’s find out in this post.
What is NEAR Protocol?
NEAR is a decentralized application platform built for running smart contracts and dapps on NEAR protocol blockchain. NEAR was created to overcome the blockchain limitations by focusing on three core areas i.e usability, scalability and security without compromising decentralization.
It was founded in 2017 by Alexander Skidanov (former Microsoft employee) and developed by Illia Polosukhin (former Google employee). Based in San Francisco, the team has grown over 100 employees (according to its Linkedin page) comprising of ace developers from Meta & Google.
NEAR protocol Mainnet was launched in 2020
The current infrastructure of web is hosted on the cloud which is owned by few players like Amazon Web Services & Google. These players have full control over the data and the apps running on their network.
This means any app running on the platform or the data stored on the cloud is controlled by the network owner which ultimately opens up the gateway for data manipulation, censorship and data breach.
Ethereum blockchain helped address this dilemma by creating a decentralized network that can host smart contracts & DAPPS. However, it has certain limitations like interoperability, scalability, speed and unfriendly design that prevents it from being accepted by the masses.
This is where NEAR protocol steps in. It wants to create an open web where all applications are decentralized and managed by a global community in a permissionless environment by working on two key factors:
- System Design
- Organization Design
System design is the technical architecture that should have both the features i.e usability and scalability that helps reduce the end-user drop off rates by providing a simple, easy to use system interface and design. NEAR has it in place by deploying a unique scaling solution called Nightshade and a consensus engine called Doomslug.
NEAR protocol made sure that its organisation and governance structure should be flexible enough to evolve with time without becoming obsolete like some older crypto projects.
Usability is the prime focus of NEAR protocol followed by Scalability
What is NEAR Coin?
NEAR coin is the native currency of NEAR protocol that help keep the ecosystem intact by driving its economy. On a broader scale NEAR platform is a marketplace where NEAR token is used to serve and manage supply and demand. On the supply side, we have validator node operators that need to be incentivized to support the community cloud and on the demand side, we have developers and end-users who are paying NEAR tokens to build DAPPS or use the platform.
The total supply of NEAR token is 1 billion
Furthermore, NEAR token is used to drive the system in the following ways –
Thresholded Proof of Stake:
To provide accurate computation, validator node operators are required to stake NEAR tokens. This is done to reward and punish the node operators. If the node misbehaves and provides inaccurate response, its stake will be cut down to secure the network while good nodes will be rewarded with more NEAR tokens.
Node operators are paid a fixed percentage of total supply for their services, at an annualized rate of 4.5% which falls under security fee.
The protocol treasury receives 0.5% of the total supply (of NEAR token) to re-invest in the NEAR ecosystem development.
Transaction & Storage Cost:
NEAR tokens are used to pay for the transaction on the network and also used to pay for the storage cost for storing data on the cloud by maintaining a minimum balance of NEAR tokens on the account or contract.
Inflation is the combination of incentives or payouts to validators and protocol treasury minus the total transaction fee collected on the network. Since the transaction fee is burnt permanently, the inflation will reduce with time once the number of transactions surges on the network. The peak inflation is 5% and is forecasted to go down.
NEAR is a deflationary currency since the transaction fee is burnt permanently
Scaling & Security Thresholds:
Scaling and security of the network require additional economic incentives which are paid in NEAR tokens. Hidden validators and Fisherman are the third party observers that are incentivized for securing the network.
In layman terms, sharding is dividing a complex process into parallel sub-processes for faster completion. The network is designed to scale infinitely using multiple shards. It follows horizontal scaling which adds more hardware to ensure better performance.
For cross-chain communication and validation of cross-chain transactions, NEAR uses Beacon Chain w/ Rollback that verifies the state transitions of all the chains using small set of validators (100) and if the problem is detected, the chains are rolled back.
This method is based on the assumption that the validator of a shard cannot be corrupted within a day. Therefore, NEAR has developed its own sharding mechanism called Nightshade sharding to fix all the loopholes and secure the transactions. More details can be read from Nightshade Whitepaper.
NEAR uses delegated proof of stake that uses sharding for performance optimization. As explained above, it deploys Nightshade sharding to secure cross-chain transactions. NEAR has developed it’s own novel consensus mechanism called Doomslug which will be discussed later in the post.
NEAR can process 100,000 transactions per second
To participate in the validator process, the stakers are selected at random without bias using Verified Random Function (VRF). The same process is also used to draw the lottery in Pancakeswap crypto exchange.
The randomness should be unpredictable and unbiased. NEAR can tolerate up to 2/3 malicious participants before it turn biased.
How does NEAR Protocol Work?
Just like Ethereum and Cardano (ADA), NEAR Protocol is a layer 1 blockchain that is capable of smart contract computations and DAPPS creation. In short, it is the foundation on which other projects or apps can be developed and deployed.
Nightshade processes the transactions in parallel across multiple shards to improve transaction throughput and network scalability. Each shard on the network produces a small part of the next block called chunk which is stored on the NEAR blockchain to settle transactions faster than any other sharded mechanism.
The Protocol uses Doomslug consensus mechanism in which validators take turns to produce the blocks rather than competing with each other based on the amount of staked tokens, which means it does not follow the general POS mechanism which automatically prefers validators with higher stake over the one with a lower stake.
NEAR is the platform for DAPPS that runs on contract based account model
NEAR Protocol Governance:
Governance is necessary to keep the network up to date by providing the necessary resources and technical upgrades. NEAR follows two types of governance.
Technical governance updates the network which includes fixing bugs, rolling out network upgrades and updating system parameters. Consider it as a theme update for a WordPress website but on a large scale. Technical governance is a difficult task to perform on a decentralized network because all the nodes must be updated simultaneously for the changes to reflect.
Resource governance looks after the allocation of resources on the network. Resources are governed and distributed by the NEAR Foundation. The Foundation is an independent entity that provides funding and infrastructure to projects which can benefit the NEAR ecosystem.
Top Projects on NEAR Ecosystem:
Aurora is an Ethereum Virtual Machine (EVM) built on NEAR protocol. It helps developers run and build Ethereum compatible apps that have high throughput and are scalable.
Proximity supports DeFi projects built on NEAR by consulting, fundraising and technical developments.
Satori is for artists and musicians who can reach fans in innovative ways using the power of cryptocurrency. Audius coin is a similar project to Satori.
Well, this project goes by my name. Paras is an NFT marketplace that deals in digital collectibles by selected artists.
NEAR Protocol is fairly new and has limited wallet support. Therefore, to store NEAR tokens, it introduced its own wallet which in future will be used for staking and governance on the network by integrating a built-in staking feature within the wallet. Trust Wallet is another popular option for storing NEAR tokens.
NEAR Protocol ICO:
NEAR ICO took place in August 2020. The coin was offered in three different options each with different lockup periods which can be seen from the image shared below –
The minimum purchase was 500 NEAR tokens and the maximum limit was set to 100K for option 1 only. The ICO sold 120 million NEAR tokens and raised around $33 million USD. The token distribution and vesting schedule can be seen from the image shared below –
The complete token supply and distribution schedule can be checked on this post.
NEAR Protocol Benefits:
NEAR protocol can process 100,000 transactions per second, the fastest among the layer 1 blockchains. Polkadot crypto is another blockchain which is aiming to reach the same figure after complete deployment.
NEAR has one of the best developer teams in the crypto industry. The core team include developers from Google, Meta and Microsoft, bringing in the right expertise that is essential for the project to blossom.
Alternative to Ethereum:
NEAR is the next-generation blockchain that is faster and cost-effective when compared to the market leader i.e Ethereum. Moreover, it has EVM that allows developers run Ethereum DAPPS on NEAR at a fraction of the fee.
NEAR Protocol Drawbacks:
NEAR will face stiff competition from the established players in the market that have bigger ecosystems and partnerships compared to its own. Ethereum, Cardano, Solana are some of the top blockchains that can hold or delay the adoption of NEAR protocol.
The smart contracts on the NEAR protocol are built on RUST, that’s not the problem. The problem is Solana crypto blockchain that uses the same language to write smart contracts. Since the language and technology are fairly new, it’s difficult to find and retain developers that can work on the project without being lured by top competitor i.e Solana with a better ecosystem.
Limited Wallet Support:
At the time of writing, NEAR tokens can be stored on limited number of wallets, the most common is the NEAR wallet.
Listing on US exchanges:
The majority of investments in cryptos come from the United States. Unfortunately, NEAR token is not yet listed on the top crypto exchanges in the US. This is because it is not yet decentralized enough and can be considered as security like the famous Ripple XRP cryptocurrency lawsuit which can land it in troubled water.
Delayed listing may prevent the token from hitting the MOON and also keep it away from organic exposure.
NEAR Token Price:
Please check the latest NEAR token price, shared below –
NEAR Token Price Prediction:
NEAR token was listed on the exchange after the mainnet went live in 2020. The token made an impressive debut at $2.00 before falling below the $1.00 mark and hitting around $0.70. It stayed in the zone for some time and soon jumped back to break previous highs in the bull run of 2021, hitting an all-time high of $7 per token.
The biggest surge came in November 2021, when it hit $18 per token and now sustaining in the key area between $12 to $14. Indeed the coin fundamentals are strong which is further supported by technical analysis.
It would be safe to conclude that the coin has much room for growth and can rally 3x in value in the upcoming bull run, that forecast the price around $50 per token (estimated).
On the flip side, the chart is forming a bearish wedge pattern that may result in fall of the token price back to $5 per token. Therefore, risk management is essential before investing in any crypto coin.
Where to buy NEAR Token?
NEAR token can be bought from the top crypto exchanges like Binance and Huobi. You can also get wNEAR on Ref Finance which is a DEX built on the NEAR blockchain.
Is NEAR Protocol worth Investing?
NEAR is the next generation layer 1 blockchain that supports smart contracts and dapps at lightning-fast speed with almost negligible fee when compared to the Ethereum blockchain. It will be better than ETH 2.0 on the technical front and strong enough to challenge the top players like Solana, Cardano and Avalanche.
The area where it lags behind, is its ecosystem and availability of NEAR tokens for the general public. Moreover, if you have invested in SOL and NEAR back in 2020, your returns on SOL will surpass NEAR by a huge margin.
Clearly NEAR has a lot to cook in the kitchen before it serves the best meal which is better than its competitors. On the bright side, the coin is quite undervalued and has a big room for growth this year. It is stable and authentic project trusted by top investment firms. Investing now may help reap good returns. As always, please do your due diligence before investing in this or any crypto coin.
This completes my review of NEAR Protocol. In the next post, I will put some light on ECOMI Coin and 0x Protocol (ZRX coin). If you’re a fan of blockchain technology then please do share it on your social handles and educate everyone around you. Do remember to subscribe to my YouTube channel for more informative content, released every week.
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
An MBA in Marketing. Paras have a decade long experience in the corporate world. He is done with office politics and corporate life, therefore decided to move on and jumped on building Katoch Tubes. He is a crypto fanatic and has the vision to bring cryptocurrency knowledge to every household in the simplest form possible using the power of internet. His area of expertise includes online marketplace, cryptocurrency and content strategy. Reach out to him on Twitter & YouTube.