With the explosion of decentralized finance (DeFi) in 2020, the shortcomings of the Ethereum network have become increasingly prominent, with handling fees of tens of dollars turning many retail investors away. Many projects try to propose solutions from Layer 2, but the biggest problem with Layer 2 is the difficulty in implementation. Other projects try to solve the problem from the Layer 1 layer, and the NEAR protocol mentioned in this article is one of them. The NEAR protocol is considered by many to be a strong competitor to Ethereum and is very popular abroad. So, what is the NEAR protocol? What is the NEAR token economic model like? How is the NEAR protocol different?
What is NEAR Protocol?
NEAR protocol is an open source decentralized PoS public chain platform. The protocol uses sharding technology and is very developer-friendly. On the other hand, NEAR is also a community-driven cloud platform. Technically speaking, the NEAR protocol has the advantages of high scalability and low development costs. The NEAR platform also supports a large set of tools, including browsers, wallet applications, and other common components, which can help developers build applications easily and quickly.
The NEAR protocol is not controlled by any legal entity, but is maintained by a group of geeks. The NEAR team includes winners from programming competitions as well as financial professionals who have been working in the cryptocurrency industry for many years.
It needs to be clarified that the NEAR protocol uses sharding technology, but it is not an Ethereum side chain, but an independent PoS public chain with its own consensus mechanism and native token format. NEAR can be regarded as a competitor of Ethereum.
Introduction to NEAR protocol sharding technology
As we all know, every node in Bitcoin needs to run all the code. As the blockchain grows, the code also increases, which is actually a waste of resources. In order to solve this problem, the NEAR protocol uses a sharding technology to divide the blockchain network so that many nodes can perform calculations at the same time, thereby improving efficiency.
Although Ethereum 2.0 also proposed sharding technology, its hardware requirements are very high, and at least 32 ETH must be pledged to run a node. In the NEAR protocol, NEAR allows nodes that are small enough to run on the cloud. Low threshold means a high degree of decentralization.
Unlike Ethereum’s sharding technology, which has multiple blockchains, the NEAR protocol is a single blockchain. To put it simply, Ethereum sharding is to separate the ledger, and different nodes manage part of it, so that everyone does not need to store it all; NEAR sharding is in the same ledger block, and then subdivided, and the entire ledger block remains constant.
The NEAR protocol is like a traditional blockchain in that each block contains all transactions for all shards, but this data does not exist in a single physical block; therefore, each node does not store all the data. Instead, validators only store transactions for their specific shard, and the list of all transactions in that block is physically stored in each validator's "chunk" on the network. This mode ensures that NEAR will not cause double-spending in cross-shard transactions without sacrificing high throughput. The "chunk" design and continuous reallocation of resources enable NEAR to achieve more efficient cross-shard communication.
NEAR’s core technology highlights
NEAR has three core technical highlights:
Dynamic sharding: As usage increases, this technology can flexibly provide expansion capabilities according to demand, and does not require developers to release a new blockchain, transfer contracts, etc.
Account model: Keys are hidden from users, allowing new use cases to emerge: meta transactions, payments with other cryptocurrencies, and NEAR Drop functionality. With this feature, you can even transfer assets to users who don’t have a wallet yet. As we all know, in public chains such as Ethereum and Bitcoin, users need to keep their private keys before they can have an account. NEAR Protocol does not require users to remember the public and private keys. They only need to be familiar with the user name to use it. And all handling fees for Dapps on NEAR will be borne by developers, giving users a perfect experience. But when users use Dapp, they don’t even need to understand the profound blockchain knowledge. This is also the future trend, simplification and popularization.
Trustless Ethereum Bridge: The link between Ethereum and NEAR, any ERC-20 assets or non-fungible tokens (NFTs) can be transferred between the two chains through this tool; in addition, NEAR can also use the The tool calls the Ethereum contract.
From a technical perspective, NEAR Protocol has greatly lowered the entry threshold for developers. NEAR is compatible with three languages: Rust, Solidity, and Type, and is perfectly compatible with cross-chain Polkadot contracts. This is also more conducive to the development of more Web3 projects in the future. Development and integration.
NEAR’s consensus mechanism
NEAR's consensus mechanism is a DAG-based consensus algorithm, the so-called "Thresholded Proof of Stake" (TPoS). There are certain similarities in the algorithms of TPoS and PoS, such as the ability to exchange Stake Tokens for network rewards, while on the other hand, TPoS should be safer in terms of system destruction. In TPoS, there is no leader node that can operate maliciously, and witnesses are spun out of all shards in detail. In addition, participants who want to act as witnesses need to lock a certain number of tokens. Once a participant behaves maliciously, the pledged tokens will be deducted.
Due to the unique design, the TPS of the NEAR network is about 1,000, but the current number of nodes is relatively small, only 162.
NEAR Token and Investment Institutions
According to public information on the official website, there are 24 investment institutions in the NEAR protocol, including many well-known institutions such as a16z Capital, Coinbase, and Baidu Ventures.
The NEAR mainnet was launched in April 2020. Due to the small number of nodes, it has been running based on authoritative proofs. At the end of September, the foundation transferred control to other node operators, achieving truly decentralized governance.
The main function of NEAR token
Ensure network security: Since running nodes requires pledging NEAR tokens, once nodes do evil, they can be punished. This mechanism can effectively ensure network security.
Transaction medium: Users need to use NEAR as the transaction medium when trading in NEAR.
Network governance: Used for network governance voting to decide how network resources are allocated and the future technical direction of the protocol.
The initial supply of NEAR tokens is 1 billion. An additional 5% of the supply is issued annually as block rewards, with 90% allocated to validators (4.5% total) and 10% to the protocol reserve pool (0.5% total). 30% of transaction fees are paid as rebates to the contracts that interact with the transaction, and the remaining 70% is burned.
What needs to be pointed out here is that the issuance of NEAR tokens is not a simple inflation, but a dynamic mechanism. That is, when the transaction scale reaches a certain level, NEAR will enter a deflation stage.
NEAR Token Price
According to the big data of BiXiaoBao blockchain, the lowest price of NEAR in history is only 0.5 US dollars. The current price of NEAR has soared to about 1.8 US dollars, with an increase of more than 86% in the past 30 days.
team
The core members of the NEAR Protocol team have sufficient development experience and competition experience, and also have working experience in large enterprises such as Google and Facebook.
Alexander Skidanov: Partner, ICPC gold medal (International College Programming Competition), former Microsoft MemSQL (distributed framework used by Uber) project director.
Illia Polosukhin: Co-founder of NEAR Protocol, finalist of the 2008 ACM International Collegiate Programming Competition (ICPC), and the main code contributor to the Google TensorFlow artificial intelligence open source project, producing programming tools used by thousands of teams in the field of machine learning. He once served as the project manager of Google's deep learning team and led the team in charge of the core search algorithm business for nearly 10 years.
Evgeny Kuzyakov: Worked in distributed development at Google and VR development at Facebook.
Mikhail Kever: Two-time ICPC champion, member of the MemSQL project team.
Dr Maksym Zavershynski: PhD in theoretical computer science, Google machine learning expert.
Jan Degtiareva: Former Niantic employee who worked on the Pokemon Go project.
Conclusion: As an emerging blockchain platform, the NEAR protocol has attracted the attention of many developers and investors with its high scalability, low development cost and friendly development environment. Its technical highlights such as sharding technology, dynamic sharding and trustless Ethereum bridge make it stand out in the highly competitive blockchain market. With the continuous development of the NEAR protocol, it is expected to become a strong competitor of Ethereum in the future, providing more possibilities for the development of decentralized applications and Web3 projects.