NEAR protocol is a smart contract blockchain that’s created to be the next-generation platform for dApps, with its own unique scaling solution. It’s a decentralized development platform designed to issue the ideal environment for dApps.
It provides that kind of environment by overcoming some of the limitations of competing systems, like low speeds and throughput, and poor cross-compatibility.
NEAR protocol is software that aims to boost a network of computers to operate a platform for developers to create and launch decentralized applications. It’s a layer 1 blockchain that uses sharding technology to gain scalability.
The protocol was created in 2020 by Alex Skidanov, a former director of engineering at MemSQL, and Illia Polosukhin, who previously worked at Google.
How does NEAR work?
Much like Ethereum and Cardano, NEAR can be classified as a base-layer blockchain, meaning it’s the foundation upon which other applications are built and deployed. It uses a technology called Nightshade to achieve its great throughput capabilities.
Also, it introduces a consensus mechanism called Doomslug to improve efficiency, while making sure blocks are completed within seconds, by having validators take turns producing them, rather than competing directly based on their stake.
Nightshade is the core technology of the NEAR blockchain, and it’s a sharding technology for processing data more efficiently.
Sharding refers to separating the work of processing transactions across many validator nodes. This way, each node will handle only a part of the network’s transactions, which allows a higher number of transactions per second.
Nightshade uses block validators and producers to process transaction data in parallel across many shards. Each shard produces a fraction of the next block, and that fraction is called a chunk.
These chunks are processed and stored on the NEAR protocol to finish the transactions they contain.
The easiest way to explain this is to visualize this an as intersection of multiple roads. The intersection is referred to as NEAR blockchain, and each road is a shard.
In theory, Nightshade can allow NEAR to handle millions of transactions per second without acting on its performance. It will dynamically split and merge shards, depending on the network condition, based on traffic and use of resources.
When the network is at a high capacity, the number of nodes increases and the overall efficiency can be maintained and transaction fees can be kept low.
Different from other proof-of-stake networks, validators do not compete for the next block based on the size of their stake, it rather uses an election mechanism called the Thresholded Proof of Stake (TPoS). It’s similar to an auction, where a large pool of validators specify how much NEAR token are they willing to stake.
Then TPoS determinates the minimum threshold for becoming a validator in each time interval. Those that have staked above the threshold have a greater chance to be selected as validators.
Rainbow bridge is an application on NEAR that allows users to transfer ERC-20 tokens, wrapped tokens, stablecoins, and NFTs between the Ethereum and NEAR blockchains.
This allows developers and users to take advantage of their higher throughput and lower fees on the protocol.
The Rainbow Bridge is completely decentralized and permissionless. To bridge tokens, users can send ERC-20 tokens directly from any Web3 wallets to the NEAR wallet, and the other way around.
This is a layer-2 solution on the NEAR blockchain, and it aims to help developer expand their apps on a platform that is compatible with Ethereum, and that offers low transaction costs.
Aurora can host thousands of transactions per second with only two seconds of block confirmation time, which is pretty impressive.
It is composed of the Aurora Engine and the Aurora Bridge. Aurora Engine is an Ethereum Virtual Machine (EVM) on the protocol, which means that is perfectly compatible with Ethereum and supports all the tools available in the Ethereum ecosystem. The Aurora Bridge is the same technology as the Rainbow Bridge, and its purpose is to seamlessly bridge their smart contracts and ERC-20 tokens.
NEAR is the native token of the NEAR ecosystem, and it’s an ERC-20 token with a maximum supply of one billion. It can be used for paying transaction and storage fees on the network.
Token holders can stake on the NEAR wallet to earn rewards. They can also participate in the governance of the NEAR network by voting and deciding, and submitting proposals linked to the products and platforms.
What makes NEAR special?
NEAR is created to be a next-generation platform for dApps. In order to achieve this, it tackles some of the issues in the blockchain space that are here for a long time, as well as some that have only become relevant recently.
NEAR is incredibly fast, and it’s able to process somewhere around 100.000 transactions per second and gain transaction completion almost instantly.
Even though its technical advantages are probably its biggest and greatest selling point,
NEAR is also meant to be approachable to those with little to no knowledge of blockchain. That is possible thanks to so-called “common sense onboarding”. It means regular users will be allowed to access dApps built on NEAR with a similar registration flow they have experience with.
All of this could help developers reach a wider audience while reducing friction for those who are already introduced to using dApps.
It provides developers with a range of modular components to aid them with fast-tracking their development and getting their projects off the ground fast.
These include implementations of NTFs, faucets, guest books, token contracts, and much more. They have a NEAR Github repo, where you can see the full range of examples and their codes.
Building on NEAR protocol
In spite of launching its mainnet not so long ago, there are numerous projects already building on the platform.
- Flux; a decentralized open market protocol
- Mintbase; a platform that makes issuing and selling NFTs cheap and simple
- Paas; an NFT marketplace that puts focus on high-quality works curated by artists
The NEAR Foundation is operating the NEAR Grants Program, which supports projects that help grow the NEAR community and ecosystem.
The future of the NEAR protocol
NEAR is constantly upgrading, and improving and is working on implementing support for the EVM, the software stack that Ethereum uses for running applications that are decentralized.
As the blockchain environment grows, platforms that can offer lower transaction costs and fees and increased throughput will most likely play an important role in adoption.
NEAR’s scaling solutions can fascinate developers who are looking to build decentralized applications and more efficient DeFi products (dApps).
The NEAR roadmap adds further sharding developments and layer-2 cross-chain solutions to further scale its blockchain and benefit end-users and developers.
Although many of these are technical, the NEAR whitepaper has more ambitious future development achievements. Including private shards, which would make it possible for certain entities or groups to capitalize on the speed and security of the NEAR blockchain while keeping their activities private.
NEAR protocol has a solid team, plenty of funding, and a lot of friends that have helped them. It has a lot going for it. There is only one thing that NEAR has not yet failed to do, and it’s to generate hype.
The question is can NEAR ever dethrone Ethereum or even catch up to Polkadot. The answer may surprise you. Possible or not, NEAR should focus on carving out its own niche instead of trying to compete with the big guys.