NEAR Protocol is a layer-one blockchain that was designed as a community-run cloud computing platform and that eliminates some of the limitations that have been bogging competing blockchains, such as low transaction speeds, low throughput, and poor interoperability. This provides the ideal environment for DApps and creates a developer and user-friendly platform. For instance, NEAR uses human-readable account names, unlike the cryptographic wallet addresses common to Ethereum. NEAR also introduces unique solutions to scaling problems and has its own the variation of the PoS consensus mechanism called “Doomslug.”
NEAR Protocol is being built by the NEAR Collective, its community that is updating the initial code and releasing updates to the ecosystem. Its declared goal is to build a platform that is “secure enough to manage high-value assets like money or identity and performant enough to make them useful for everyday people.”
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NEAR is the native token of the NEAR ecosystem. It’s an ERC-20 token with a max supply of 1 billion. NEAR can be used for paying transaction and storage fees on the network. Also, smart contract developers can receive a portion of the transaction fees their contract generates. To keep NEAR scarce, the remaining transaction fees will be burned.
Token holders can stake on the NEAR Wallet to earn rewards too. They stake NEAR to run validating nodes for rewards that amount to 4.5% of the total NEAR supply. They can also participate in the governance of the NEAR network by voting on decisions and submitting proposals related to the platform and products.
- Transaction fees - All transactions which occur on the NEAR blockchain must be paid for using NEAR. Due to the proof-of-stake (PoS) and scalable nature of the chain, these transaction fees are often very low.
- Staking - Fundamental to PoS ecosystems, $NEAR can be delegated to validators (staked) to earn $NEAR rewards.
- Acquiring a validator seat - To become a validator on the NEAR blockchain a minimum amount of $NEAR is required.
- dApps - Those building on the NEAR ecosystem can, and have, choose to leverage the $NEAR token in a number of ways expanding on its utility.
- Governance - Used for governance votes to determine how network resources are allocated.
NEAR uses its Nightshade technology to improve transaction throughput massively. Nightshade is a variation of sharding, in which individual sets of validators process transactions in parallel across multiple sharded chains, improving the overall capacity of the blockchain. In contrast to “regular” sharding, shards in Nightshade produce a fraction of the next block, called “chunks.” In doing so, NEAR Protocol is able to achieve up to 100,000 transactions per second and achieve near-instant transaction finality thanks to a one-second block cadence while simultaneously keeping transaction fees at virtually zero.
The NEAR Foundation is a Swiss-based non-profit dedicated to protocol maintenance, ecosystem funding, and guiding the protocol's governance. The protocol has also built a bridge to Ethereum, allowing users to transfer ERC-20 tokens from the Ethereum blockchain to NEAR.
The main projects built on NEAR layer-1 blockchain protocol are Aurora ($AURORA), Ref Finance ($REF), and Octopus Network ($OCT).
Rainbow Bridge is an application on NEAR that allows users to transfer ERC-20 tokens, stablecoins, wrapped tokens, and even NFTs between the Ethereum and NEAR blockchains. This lets developers and users take advantage of the higher throughput and lower fees on the NEAR Protocol.
The Rainbow Bridge is fully permissionless and decentralized. To bridge tokens, users can send ERC-20 assets directly from MetaMask or other Web3 wallets to the NEAR Wallet and vice-versa. First, they need to deposit the token in an Ethereum smart contract. Since direct token transfer is not possible between networks, the tokens will be locked and taken out of circulation on Ethereum. New tokens will be created on NEAR to represent the original ones. In this way, the total circulating supply of the token remains constant across both blockchains.
NEAR was a machine learning project before it became a blockchain development platform. Illia Polosukhin and Alexander Skidanov started NEAR.ai in early 2017 to explore program synthesis: the field of automating programs from a human specification. Named for the science fiction novel The Singularity Is Near, the NEAR project drew from Illia’s work as a lead contributor for TensorFlow at Google and Alexander’s as the lead engineer at MemSQL.
Researching program synthesis led the team to explore programmable smart contract platforms and crypto payments in late 2017 and early 2018. As they explored the solution space and tried out a variety of blockchain protocols, they realized the current state of the tech didn’t meet their needs and began to design a blockchain that could. Illia and Alex gathered a team of engineers and formally started building NEAR Protocol in August 2018. The founding vision for the NEAR platform was to offer developers an easy path to building decentralized applications that can scale to mass usage. To achieve these goals, NEAR adopted a Proof-of-Stake (PoS) mechanism to support transaction verification and block production.
NEAR combines a horizontal scaling approach with a new consensus mechanism that splits the network into parallel shards and dynamically distributes the computation to increase the network's processing capacity. The network launched in April 2020, became community-operated in September 2020, and passed a vote to enable token transfers in October 2020.
