Let's talk Web 3: NEAR Protocol
As the crypto and web 3 scene continues to expand, the grading of each new product is still unknown. This means that for the average person, we’re more so pushed toward the most popular products in the market right now. Whether it’s an application or protocol, this entire space continues to develop and we have the opportunity to define the new landscape.
This series aims to dive into the most popular crypto & web 3 products to:
Break down the ‘why’ behind its popularity
Uncover the benefits & challenges
Question the design
Gauge developer’s sentiment
Provide recommendations and peek into trending news
This is our opportunity to set the bar, so join me through this article as we tackle the NEAR Protocol.
What is the NEAR Protocol?
Imagine a blockchain that is designed for developers, capable of supporting decentralized applications (dApps) through an entirely revolutionized system and higher compared to the impact of AWS in the blockchain space. Did I also forget to mention that this blockchain was kickstarted as an ML project before it developed into a blockchain protocol? In a short period of time, it’s evident that the NEAR Protocol has gained momentum that only continues to rise.
The NEAR Protocol is a layer one blockchain that was created to take on a unique approach to enhance scalability and speed beyond the traditional capabilities offered by Ethereum. The simple, secure and scalable technology puts itself at the center point of this growth as it currently offers slow transaction rates, limited throughput and poor compatibility.
In Web 2, we are commonly aware of AWS’ role as the base layer for applications while also providing centralized data storage. In Web 3, NEAR is introduced to provide similar support of becoming the base layer for decentralized applications, but most importantly, operated by a distributed network of computers.
Daily transactions above 750K, strong partnerships, sharded blockchain numerous educational support systems.
Multi-language smart contract development, compensation, unlimited scalability, multi-blockchain bridge, carbon-neutral, extremely fast
Key partnerships, 590+ projects, courses, guided workshops, education video series, Hacker house
Sharding, hidden validators, fisherman
Sharded blockchain, Nightshade, Doomslug, $NEAR storage
🚀 Debunking the Popularity
Over the past 4 years, NEAR has been able to raise a total of $533.7 million and most recently $350 million at a $10 billion valuation. This includes funding from top investors including a16z, Multicoin Capital, Tiger Global, Coinbase Ventures and many more.
The primary reason for this immense popularity is surely the vision surrounding the technology establishing itself as a strong competitor to many other blockchains. Its attraction comes from the fact that it offers up to 100,000 transactions per second and near-instantaneous transaction finality. From a developer’s perspective, it’s only exciting to see that there an alternative blockchain exists capable of enhancing the development process with improved speed and compatibility.
Since its creation, its community has only continued to expand, including the projects/individuals supporting this growth. Currently, it’s averaging above 745,000 transactions in the last 24 hours with spikes of up to 1.7 million transactions - sitting at a total of 158 million transactions and counting. It’s also seen immense growth in the developer engagement where it uses metrics to track daily contract usage and the total number of new contracts - sitting at an average of 1000 active contracts daily and above 43,000 new contracts to date. This data can be viewed here.
Next up is the strong trust and confidence that is provided on the team and of course, the co-founders llia Polosukhin and Alexander Skidanov. With past experiences from Google and Microsoft respectively, these bright minds began to develop this company as they recognized the missing components in other blockchains. The team has clearly demonstrated strong potential - raising millions of funding within months of the company’s launch.
Finally, its popularity reigns over the blockchain community by the impact of its innovative projects and partnerships. The team continues to launch various projects including the NEAR Wallet, introduce NFTs (emphasis on utility), and support innovative projects built in the ecosystem. It has been clear to notice that NEAR is actively engaging in opportunities to tie together various initiatives within the blockchain space. This includes NFT tickets, partnerships with different protocols and more discussed in the Community section.
🧑💻 User Experience & User Interface
As a blockchain, there are very limited ways to interact with it whether as a developer or using a decentralized application. This means that the emphasis on its user experience will always come down to the developers and their comfortability maneuvering through this new technology. With this under consideration, the NEAR team clearly understood their objectives.
NEAR has strongly positioned itself as a developer-friendly blockchain, but is that True? There are six key factors that are built at the core of this blockchain, each of which plays a vital part in providing more flexibility and support to developers.
Multi-language smart contract development: Write contracts using Rust or AssemblyScript.
Compensation: Earn 30% of the fees generated by the contracts.
Unlimited scalability: Horizontal scaling with support from sharded blockchain design.
Multi-blockchain bridge: Cross over contracts & data across Ethereum or Polkadot.
Carbon-neutral: First certified climate-neutral blockchain.
Extremely fast: Up to 100,000 transactions per second.
The following summarizes numerous features that enhance the developer experience and expands on the appealing factors surrounding this chain:
Human-Readable Account Names
< 1.2 second block production
Super low transaction fees
The community plays a vital role in crypto projects as it not only ensures the primary traction but supports its ability to sustain its popularity as it continues to scale. In web 3, everyone has skin in the game and collectively works together to go through a continuous interactive process to develop the best products.
For a blockchain to be successful, the community will need to support it at various levels of consumption and utilization. This is why NEAR has committed $843 million to its ecosystem. This also expands into the various number of partnership it continues to establish across this space including:
Infura: Bridge over 430,000 Infura developers to a NEAR/Infura integrated dev platform.
Ceramic: Empower NEAR developers with streaming data and cross-chain identity protocols.
ConsenSys: Strengthen developer facilities and availability of developer products via Auoura partnership.
And many more can be viewed, here.
Within its ecosystem, you’ll find over 590 projects & counting that are actively being built from dApps, infrastructure, NFT, utilities and here are a few to highlight:
Rainbow Bridge: A dApp built on NEAR to serve as the bridge between NEAR and Ethereum. By positively benefiting from the speed and low fees of the NEAR Protocol, it is possible to transfer ERC-20 tokens, wrapped tokens and NFTs.
Aurora: An EVM built by NEAR to provide flexibility to developers by supporting the development of Ethereum applications on NEAR and the usage of Ethereum developer tools. This allows developers to leverage the perks of NEAR (low fees, scalabaility, etc.) while building a dApp that can be compatible with Ethereum.
Did you think that was it? Though these are the two most prominent projects, here is an awesome graphic covering many more projects in the ecosystem based on a variety of use cases:
Developing a community for a blockchain-specific project is not an easy task. Beyond the primary surface of social media engagement and blogs/tutorials on various topics - strong educational support is constantly required for sustainable growth. As numerous projects are being built to solve unique cases, understanding the base layer of the platform you’re using is essential and this is a focus that NEAR strongly upholds.
The investment toward education is clearly emphasized and no matter the developer’s background - the NEAR Protocol is actively encouraging developers to leverage their technology. This means that the documentation and support should not be the issue. The resources consist of courses, guided workshops, education video series and an engaged set of developers supporting the community. Beyond the first set of resources you’ll come across on the official website, you’ll also need to know about Near University - a platform built to empower to learn, earn and connect powered by the NEAR community. There’s finally find NEAR Hacker Houses taking place at various conferences that hold talks, workshops, office hours and much more.
🛠 Developer’s Corner
NEAR Protocol was created with the objective to tackle the flaws that exist with current blockchains and it started with the implementation of new technology that focuses on enhancing speed and scalability. The simple, secure and scalable technology puts itself at the center point of this growth - only exciting to see where it’ll go from here.
This is done by unique solutions named “Doomslug” and “Nightshade” developed by their team. Beyond the cool names, these solutions are able to enhance common scaling issues by leveraging their own consensus mechanism (Doomslug) and also offer their own variation of sharding to provide an enhanced capacity to the blockchain (Nightshade).
This layer one was built primarily using sharding as the centrepiece. This horizontal scaling technique which is often used for scaling databases is a method to split the blockchain into small segments across various subgroups of nodes to distribute storage and computing to multiple nodes in the network.
Back in 2020, the team recognized that a completely sharded network was not required at their stage despite the incredible traction that was taking place. With an average of over 300,000 transactions daily, only 5% of the network’s total capacity was being used. Going forward, the team implemented Nightshade in four phases:
Simple Nightshade: Network throughput increase as the foundational layer of sharding the state for tracking, but not processing.
Chunk-Only Producers: Introduce a new role in the network to only validate one shard - not requiring expensive hardware as they will not be able to produce blocks or contribute.
Nightshade: Enhance validator accessibility as it will not be required for validators to track all shards. As a Proof-of-Stake driven blockchain, NEAR leverages this consensus mechanism to partition “each block's transaction list into physical parts, one for each shard”.
Dynamic Sharding: End-goal of limitless scaling of the network to “dynamically split and merge shards based on resource utilization”.This would ensure a cost-effective approach to practively scale and secure while adjusting with the capacity/traction of the network.
A new approach to block production enables this chain to ensure the continuous production of blocks specifically beneficially in network conditions where a large number of nodes are irresponsive. This was created “to achieve some sense of practical finality after just one round of communication, with a finality gadget providing full BFT finality after the second round”.
This means that the blocks that are created by this new technique are irreversible once they are completed unless the malicious validator is slashed. This improves the alternative method of BFT consensus as it doesn’t require 2/3 of participants to be online but rather only half to be online and honest.
For developers building on NEAR, it is also important to recognize that similar to AWS, Azure, or Google Cloud - they’ll need to pay for their services, but at a drastically cheaper cost. The $NEAR token is used simultaneously in the build process to pay for running dApps, transactions and most importantly storage. This ensures that dApps are paying for the correct amount of consumption that they use with respect to the validators maintaining the state.
Token holders are granted access to store data on the chain at the cost of 1 $NEAR token per 1 KB of data for network and computation usage. In the process of paying for the service, the number of tokens used is removed from circulation.
The entirety of NEAR’s blockchain structure leveraging sharding allows for speed and scalability, however, it provides additional security by reducing the points of failure that can occur. But how does this work?
As each node is responsible for storing small segments of the blockchain, it means that the data is segmented across numerous nodes limiting the disruption of the entire chain. In addition, there are third-party observers known as “Hidden Validators” and “Fisherman”.
“Hidden Validators” are selected to validate shards unknown to any parties limiting the minimum number of nodes that are able to conduct malicious attacks. “Fisherman” is actively engaged to detect bad behaviour. These additional systems are in place to ensure that the vulnerabilities are proactively dealt with. To incentivize node operators for their involvement, 4.5% of the total supply is allocated and distributed across all nodes.
In addition to the security systems in place, NEAR also offers “progressive security” for developers to implement Web 2-driven experiences such as the limitation of blockchain knowledge or delayed onboarding within their own dApps. This would allow developers to enhance their projects for a more comfortable user experience.
📰 Recommendations & News
Aurora launches a $90M fund to finance DeFi apps on Near Protocol. Read more.
Infura and NEAR Protocol partnership. Read more.
Here are a few ideas that can support the development of the NEAR Protocol:
Incentivize developers with mini-credentials throughout their developer experience to create more projects and become an expert.
NEAR Tutorials / Quick Start Projects
Develop more quick-start projects and more content (i.e. blogs or tutorials) for developers new to NEAR - explaining the overall benefits as well.
Recognize the top leaders using the NEAR Blockchain and create incentives for more developers/projects to be onboarded.
Please note that this analysis would not be possible without the comprehensive documentation provided by NEAR. Read the white paper. Here are other resources that were used:
NEAR Launches Simple Nightshade: The First Step Towards a Sharded Blockchain