What is NEAR?
Jul 15, 2022
NEAR describes itself as ‘a collective, a foundation, and a development platform’, and aims to address some of the scaling and efficiency challenges of other, well-known blockchains. Like Ethereum, NEAR protocol is a base-layer blockchain that acts as a foundation for the deployment of dApps and smart contracts. NEAR seeks to scale horizontally by integrating an innovative sharding mechanism called Nightshade. At the same time, it promotes itself as a certified carbon-neutral protocol thanks to its engagement in a variety of green projects.
Developed by Alexander Skidanov, a former research consultant with OpenAI and director of engineering at MemSQL, and Ilia Polosukhin, former Google Engineering Manager, NEAR began as a machine learning project. However, in 2017, as Polosukhin and Skidanov explored the potential of automated smart contract functionalities, they decided to focus on the opportunity to build a platform that could scale to meet mass adoption needs. To that end, the two developers formed the NEAR collective and created the NEAR protocol as a proof-of-stake blockchain and decentralized app platform that would focus on usability for both developers and users. The network then finally launched in April 2020.
NEAR raised over $20 million in development funding, including contributions from Andreesen Horowitz and Pantera Capital. Skidanov and Polosukhin launched the NEAR protocol mainnet in April 2020, with the NEAR token as its native token. In April 2022, NEAR announced it had completed a $350 million funding round, including investment from Tiger Global, Republic Capital, FTX Ventures, Hashed, and Dragonfly.
Like other smart contract platforms such as Ethereum, the NEAR protocol acts as a layer on which developers can deploy dApps with a range of functionalities. Regarding scalability, NEAR distinguishes itself from its competitors with its sharding solution, Nightshade. Sharding is a process enabling parallel execution by which a blockchain network is partitioned into different sections (shards) in order to ensure that individual nodes are not required to manage the entirety of the network’s code.
Nightshade enables the NEAR protocol to process transaction data more efficiently by splitting the workload over multiple shards. Each shard completes a fraction of the work necessary to verify transactions in a given block, in parallel, before those completed blocks are added to the main chain. When network traffic is high, Nightshade can dynamically distribute computation and adjust the number of shards based on user demand to increase the network's processing capacity, a feature called dynamic re-sharding. In theory, Nightshade, therefore, allows the NEAR protocol to handle millions of TPS, without compromising its processing performance or increasing transaction fees. Besides Nightshade with dynamic re-sharding, NEAR also offers a powerful consensus engine called Doomslug. With Doomslug, NEAR is able to achieve some sense of practical finality after only one round of communication, with a finality gadget providing Byzantine Fault Tolerance (BFT) finality after a second round.
The NEAR protocol also facilitates interoperability between different chains via the Rainbow Bridge, a permissionless protocol that ‘allows any information that is cryptographically provable on NEAR to be usable in Ethereum contracts and vice versa’. NEAR has also deployed Aurora, an Ethereum Virtual Machine (EVM) implementation that allows developers to launch dApps built for Ethereum on the NEAR network.
The NEAR token: NEAR is the native token of the NEAR protocol and is used to pay transaction fees and storage fees. Smart contract developers may also receive NEAR when their contracts generate transaction fees. The NEAR protocol is a proof-of-stake blockchain: users can become validator nodes by staking their NEAR token and may participate in governance decisions based on the amount of NEAR that they hold. Furthermore, only token holders are allowed to store data on-chain, similar to checking accounts in banks that require a minimum balance.
Like Ethereum, NEAR serves as a layer-one blockchain on which developers can build and deploy dApps, but it also characterizes itself as a foundation and a collective.
Blockchain: NEAR is designed as a platform for the deployment of dApps, smart contracts, and other blockchain-based functions. Key uses cases of the NEAR protocol include:
- Defi: NEAR aims to make decentralized finance 'accessible to everyone’, and hosts a number of Defi projects including Proximity, Ref Finance, and Flux Protocol.
- NFTs: NEAR serves as a platform for the deployment of non-fungible tokens (NFTs) that can represent and verify ownership of a unique digital asset.
- DAO: NEAR is a platform for the deployment of decentralized autonomous organizations (DAO), self-governing communities that manage governance on the blockchain.
Foundation: The NEAR Foundation describes itself as a ‘unique organization’ that supports NEAR with its financial and operational resources. Its goal is to create a ‘self-sufficient ecosystem of creators, developers, entrepreneurs, community members, and tokenholders’ on the NEAR protocol.
Collective: The NEAR Collective is a diverse community of NEAR users, comprising accounts, members, guilds, and DAOs. NEAR encourages the development of the Collective as a way to drive engagement with the protocol, and host an Open Web Sandbox, educational resources, a Discord server, and community events.
NEAR continues to drive engagement with its ecosystem through its Collective and Foundation. It continues to work towards a ‘multi-chain future’ by introducing interoperability with other blockchains via integrations with Allbridge and the Octopus Network. NEAR is seeking to attract innovative development to the platform, announcing new tools, and integrations regularly. In 2022, for example, it focused on the potential for musicians to use the protocol as a way to create and distribute music, and retain control of their work without restricting access. On the technical side, Phase 1 of their sharding solution, chunk-only producers, is expected to launch in late 2022 with Phase 3 finally introducing dynamic re-sharding.