TLDR

• NEAR Protocol is an L1 network that uses sharding to achieve high TPS
• The network uses a proof of stake consensus mechanism to secure and validate transactions on the blockchain
• NEAR Protocol is backed by big names like Pantera Capital & A16z
• $NEAR token is inflationary by design but can become deflationary with increased network usage
• NEAR is working on interoperability with existing L1 networks through its Ethereum-compatible Aurora network
• NEAR is designed to scale according to demand, with low transaction costs, and built-in incentives for developers - solving issues that plague Ethereum
• NEAR offers the ability to build dApps in both AssemblyScript and Rust

All numbers and metrics in this report are accurate as of January 18, 2021.

Product and Roadmap

NEAR Protocol is a sharded Proof-of-Stake chain with unique sharding tech and multi-chain interoperability. Some of the many benefits of Near Protocol include:

• Dynamic re-sharding (Nightshade) to achieve high TPS
• EVM, Rust, And WASM compatible
• Gasless EVM chain: Aurora
• IBC-compatible parachains: Octopus Network
• Backed by strong VCs like Pantera Capital & A16z

Protocol Design

Dynamic Re-sharding While sharding is not 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. Instead of the number of shards being static, the network will be constantly readjusted based on utilisation. By the practice of dynamic re-sharding, NEAR can reduce the average cost of using the network while maintaining high transaction throughput.

NEAR uses a technology called Nightshade to achieve massive throughput capabilities. The scaling solution sees individual sets of validators process transactions in parallel across multiple sharded chains to improve overall transaction carrying capacity of the blockchain. As the network gets congested, new validators are incentivized to create new shards to ease congestion. Currently, TPS is 3k with 4 shards and it is projected to hit 100k TPS in 1 year

Moreover, NEAR introduces a novel consensus mechanism called Doomslug to boost efficiency, while ensuring blocks achieve finality within seconds by having validators take turns producing blocks rather than competing directly based on their stake

Read more here

Consensus Mechanism Near uses a delegated proof of stake 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.

Human Readable Addresses Near uses human readable IDs instead of a public key hash. This means that users can have a wallet address like NansenAlpha.near for free. Something similar can be observed on Ethereum whereby people can purchase name labels for a fee.

This is a significant feature that we believe helps to make the crypto space more “new-user-friendly” as well as create greater trust and discoverability for companies, applications and users.

Account names are similar to domain names. Anyone can create a top-level account (TLA) without separators, e.g. near. Only near can create alice.near. And only alice.near can create app.alice.near and so on. Thus using this logic, near can NOT create app.alice.near directly.

Gasless EVM Chain: Aurora Aurora allows for EVM compatibility and Interoperability to NEAR. Aurora focuses on two core components: Aurora Engine runtime, allowing for seamless deployment of Solidity and Vyper smart contracts, and the Aurora bridge (based on Rainbow Bridge technology) allowing the seamless transfer of tokens and data between Ethereum and Aurora.

IBC-compatible parachains: Octopus Network Octopus Network’s mission is to increase NEAR’s interoperability with other blockchains. It aims to create an interoperable network of app-specific blockchains, called appchains, that will be validated by Octopus Network smart contracts hosted on NEAR.

Near Guilds These guilds are basically communities that improve the Near ecosystem by providing a different suite of services in the Near ecosystem. Each guild shares a specific vision and mission related to driving a more open, interconnected and consumer-empowered world.

Each guild is also represented by a guild leader and the NEAR guild programme will reward these leaders and their communities when the guild work is aligned with a healthy ecosystem. The amount of rewards that the guild receives is dependent on factors such as the amount of active development, referrals to other NEAR programs, running validating nodes to claiming bug bounties.

Currently, there are 73 active guilds that are actively contributing to the Near ecosystem in various ways. - Making memes / NFT clubs / Gaming / etc.

Rainbow Bridge Near’s Rainbow Bridge will allow existing Ethereum users to seamlessly migrate their assets to Near’s ecosystem with ease. In phase 1, users will be able to bridge and ERC-20 tokens they wish. Eventually, there are plans to incorporate other chains like Fantom, BSC, Polygon, etc.

Sending assets from Ethereum to Near will take about 6 minutes and for ERC-20 costs about US$10 on average.

Roadmap

Q1 2021

• Dragonfly Capital joined NEAR Protocol’s validator advisory board
• NEAR Foundation announced that it would be allocating 250 million dollars to projects building on the NEAR Protocol blockchain over the next four years

Q2-Q3 2021

• NEAR Protocol launched Rainbow Bridge
• Aurora launches on NEAR protocol
• NEAR X Filecoin collaboration
• NEAR X Opera Browser integration
• Aurora announced USD$12mn funding, featuring Pantera Capital and Electric Capital

Q4 2021

• NEAR announces USD$800mn funds towards ecosystem development
• Completion of Simple Nightshade (NEAR protocol split into four shards shared among the same 60+ validators, increasing throughput by 4x)
• NEAR X Terra partnership (UST’s expansion to the NEAR ecosystem demonstrates the importance of a move toward a multi-chain, composable future)

Q1 2022

• NEAR Protocol is working on increasing its number of validators from 60 to 100, and is hoping to have 100+ validators by Q1/Q2 2022.
• Introducing Chunk-only producers (who only validate one shard)

Q2/Q3 2022

• Near Protocol will introduce dynamic re-sharding. In theory, this will give the NEAR blockchain limitless scalability.

Might be subject to changes, further features TBD

DApps on Near / Aurora

For more information on a curated list of all projects building on NEAR ecosystem: https://awesomenear.com/

Chain Comparison

Data accurate as of January 14, 2022

Token

Distribution

37.7% to backers/ team and the rest to community

Additionally, to offset the 5% inflation from validator rewards, NEAR’s tokenomics also includes a fee-burn mechanism similar to Ethereum’s EIP-1559. In NEAR, 70% of all transaction fees are burned, meaning the network becomes disinflationary as usage increases. With an average of 1.5 billion transactions sent per day, the NEAR token will become deflationary and the token supply will decrease by 0.475% per year.

Daily network usage & Annual token inflation

Token Supply Data

Source: CoinMarketCap as of January 18, 2022

Social Metrics

Team

• Alexander Skidanov and Illia Polosukhin announced the NEAR Protocol in July 2018.
• The two met in 2018 Y Combinator startup accelerator program and started working on NEAR journey.
• While researching program synthesis, the team discovered the concept of smart contracts on distributed payment networks like blockchains and this encouraged them to explore deeper. After testing a wide range of available blockchain platforms in 2018, they concluded that what they needed hadn’t been built yet, and started to develop NEAR.

Backing

Community

Takeaway

NEAR protocol has secured a range of investments, fundings, and a concrete roadmap. As more individuals discover the potential and opportunities from building on NEAR, we will certainly start seeing more individuals pushing the narrative.

What is promising

• Focus on product and delivery
• NEAR’s focus on incorporating unique tech - emphasis on dynamic re-sharding tech to increase throughput (currently 3k TPS with 4 shards, projected 100k TPS)
• Fast finality and low transaction fees
• Backed by established VCs
• EVM, WASM, Rust compatibility
• Provides seamless migration for Ethereum users to NEAR protocol using Aurora.
• Aims to provide a more simple user experience for new crypto users. Helps with the onboarding process.
• Focuses on making it easier and sustainable for developers to build on the network. E.g. 30% of transaction fees goes to developers.
• 3rd fastest growing developer community across the whole crypto ecosystem.

What allows for skepticism:

• Still lots to do in terms of the quality and quantity of applications built on NEAR
• Not much live yet (could also be an opportunity)
• Not many users are currently using/ building on NEAR (huge opportunity, but needs more marketing push/ direction)
• A sharded approach has different security implications. A full node in a sharded blockchain can run a full node for one or a few shares and run a light client for the rest. As block producers are split into different shards, it is more likely that block producers in a given shard can become malicious and accept invalid transactions.
• Another thing to take into consideration is liquidity issues on chain - seems like all value has accrued to the base layer NEAR and within Aurora.

Links

Website: https://near.org/ Twitter: https://twitter.com/nearprotocol Coingecko: https://www.coingecko.com/en/coins/near Blog: https://medium.com/nearprotocol Docs: https://docs.near.org/docs/develop/basics/getting-started Whitepaper: https://near.org/papers/the-official-near-white-paper/ Github: https://github.com/near