Near Protocol is quite new to the market, but has been in development since 2018. Developers have claimed to create a Polkadot competitor, well, seems like they are on the right path. ✅
What is NEAR protocol?
NEAR Protocol is an open sourced, high throughput smart contract platform designed for building decentralized applications. One of the key features of the network is sharding, the ability to divide the whole blockchain into separate segments.
A tiny bit of history
The project was founded back in 2018 by two friends, fond of programming and fascinated by the idea of blockchain. The NEAR team was then joined by developers from leading IT companies, including Facebook, Google and Niantic. 😎
During the NEAR ICO, taking place on the CoinList platform in 2020, 120 million NEAR coins (just 12% of the initial 1 billion token issue) were sold at a price of $0.3. That, however isn’t the case.
The first big success was the launch of NEAR Rainbow Bridge in 2021 - a cross-chain bridge that provides interoperability with Ethereum and allows transferring ERC-20 standard crypto assets to the NEAR Protocol as well vice versa was introduced to the public. 🌉
Shortly after, the Aurora L2 solution was introduced. Aurora made the execution of Ethereum Virtual Machine (EVM) smart contracts on the NEAR Protocol network possible. 🤝
In the summer of 2022, NEAR announced a partnership with BitGo - one of the largest custodial service providers. And just In mid-September 2022, a fund of a 100M$ aimed at developing the Web3.0 section was launched by the NEAR foundation.
How does it all work
The NEAR protocol is based on a Proof-of-Stake consensus algorithm, which uses sharding technology to maximise its performance. While dividing the blockchain into small segments (shards) that can perform operations in parallel it still treats every shard a part of the same blockchain, Unlike competitors like Polkadot. 🙌
The key to blockchain’s integrity is the Nightshade mechanism, which allows adding each shard by just creating a snapshot of its current state. Every shard, however, still maintains its own set of validator nodes that report the shards state whenever a block is produced. Shards are also able to work in parallel, since none of the transactions performed on those overlap. 💥
You could easily visualise the mechanism as the intersection of many roads, with each road being a shard and the NEAR protocol being the intersection. 🛣️
Back to Aurora
The flagship product of the NEAR protocol is Aurora - a Layer 2 protocol uniting the NEAR blockchain and the Ethereum Virtual Machine. Aurora is aimed at simplifying the process of all the decentralised applications migrating from Ethereum to the NEAR ecosystem. 💻
The protocol is already working with a number of large decentralized applications such as 1inch and Curve. The TVL inside Aurora, according to DeFi Llama, is about $175 million by September 2022, with a significant part being blocked in the Bastion (BSTN) and Trisolaris (TRI) DeFi protocols. There are about 200 applications based on Aurora in total. 😳
What else does NEAR offer?
Obviously, Aurora isn’t the only product in the NEAR ecosystem. The other are:
Ref Finance
The largest decentralized exchange in the NEAR ecosystem, using the AMM. Ref Finance operates liquidity pools, as well as the so-called stable pools (Sauce) for stablecoins. The protocol offers a program of increased rewards for staking the native REF token. The TVL of the project as of September 2022 is about $234 million. 💳
Burrow Cash
A decentralized lending platform, allowing the users to issue synthetic assets secured by the inside staking locked NEAR cryptocurrency as well as many other assets (such as LINEAR and USN). As a reward for activity, the protocol awards native BRRR tokens. The current volume of deposits, locked in Burrow, according to the official website of Burrow, is approximated at $75 million with $12.9 million in loans. 💰
Tokenomics
NEAR is the project’s native cryptocurrency. It is used for almost all the transactions on the network. The coin is also staked by the validator nodes and delegators. Even though the main source of validator rewards and delegators is issuing new coins, some are still burned to pay the network commission. 🔥
Another NEAR cryptocurrency function is obviously paying network fees. At the same time, 30% of the fees are automatically sent to the developers of the used smart contract, the remaining 70% are given to the validators. In addition, NEAR has the option of “free” transfers: when activated, the contract operator is required to pay for the transaction. In terms of total capitalization, NEAR is in the top 30 cryptocurrencies. 🥇
At the end of April 2022, the USN stablecoin was launched on the NEAR network. Originally, its price was mostly provided by arbitrage operations and a reserve fund from NEAR and USDT. However, in the summer of 2022 the Decental Bank DAO have launched a new version of USB, completely supported be USDT reserves. 🏦
Conclusion
Even though the project doesn’t offer us anything too revolutionary, we are still getting a reliable network with multiple working products and even more further possibilities.
Stay tuned 📻
