NEAR Protocol NEAR

Introduction

NEAR Protocol is positioning itself as a Blockchain Operating System (BOS) aiming to become an open-source community-run public cloud computing platform for decentralized applications (dApps).

As a BOS, NEAR aims to cater to three core audiences: developers, enterprises, and end-users, allowing them to build and interact with decentralized applications seamlessly across blockchain networks. To achieve this, the platform is pursuing partnerships and collaborations with other blockchains and traditional Web2 players like Ali Baba Cloud.

Its key features include simplifying user onboarding through FastAuth, enabling easier development with familiar languages like JavaScript, and providing universal search and gateways to enhance user experience. The platform promotes the creation of decentralized, composable front ends, facilitating interaction across various blockchains.

The BOS is built on top of NEAR’s Layer-1 blockchain network, comprising an innovative scaling mechanism known as Nightshade sharding, which ensures exceptional scalability. At the same time, its unique feature of named accounts facilitates straightforward user onboarding, making it an ideal platform for mass adoption in the Web3 sphere.

NEAR’s primary goal is to serve as a robust and scalable infrastructure for a new generation of dApps. Its platform is tailored for developer convenience, allowing code in widely-used languages like JavaScript. This focus on accessibility propels its mission to foster a vibrant ecosystem of dApps — a vision already taking shape with hundreds of projects under development.

NEAR Protocol is not just a blockchain; it’s a builder’s platform that bridges the gap between technology and mass adoption, driving the decentralized revolution forward. With its exceptional scalability, user-friendliness, and developer-friendly environment, NEAR Protocol is carving its niche as a key player in the blockchain space.

The protocol also intends to push the boundaries of decentralization through initiatives like Pagoda, DevHub and the NEAR Digital Collective (NDC), which is an initiative within the NEAR blockchain ecosystem dedicated to reshaping its governance.

By introducing a more transparent and decentralized model, the NDC aims to give every member of the network a voice in the ecosystem’s decisions. Central to this endeavor is the development of the NEAR Constitution, a document that will embed principles of self-governance and decentralization into the ecosystem’s core operations. In essence, the NDC’s goal is to foster collective decision-making and self-determination, ensuring the NEAR ecosystem evolves with its diverse members’ active participation and consensus.

Similarly, the DevHub is aimed at the developers in the ecosystem and comprises activities like ideation, implementation, review, support, and voting. NEAR standards and protocol changes are managed by developer working groups which utilize a formal process (NEP-0001) for voting on alterations.

Meanwhile, Pagoda is a comprehensive Web3 toolset designed for developers looking to build and scale blockchain startups or integrate Web3-native tools throughout the tech stack. One of its core features is the Developer Console, facilitating smoother transitions from developer to entrepreneur within the Web3 space.

Market

NEAR Protocol operates in the rapidly growing and increasingly competitive blockchain technology and cryptocurrency market. However, its key advantage is its goal of becoming an operating system of the future that allows anyone to seamlessly access services on multiple blockchains. Additionally, the protocol is focused on enhancing decentralization within the ecosystem and the overall industry through governance initiatives like the NDC and DevHub.  NEAR’s primary audience includes developers seeking a more accessible and scalable blockchain platform and enterprises seeking to leverage decentralized technologies in their operations.

NEAR Protocol’s potential lies in its novel sharding technology, which can provide scalability at a higher level than many existing blockchain platforms. Its user-friendly approach to smart contract development, focusing on familiar coding languages, also gives it an edge in attracting a wider pool of developers.

NEAR’s goal is to create a fully decentralized Web3 ecosystem that is collaborative rather than siloed as the industry currently is, with each blockchain existing in an ecosystem of its own. To achieve this, NEAR intends to create a web of partnerships with other blockchain networks and create an “operating system” that will allow developers and users to seamlessly access and interact with projects across chains.

One such partnership is the recent collaboration between NEAR and Polygon, where they have jointly introduced an interactive zkEVM app dashboard on the BOS. This alliance aims to bolster accessibility and improve the user experience for zkEVM developers. Polygon’s zkEVM, a notable zero-knowledge scaling solution compatible with the Ethereum Virtual Machine, will have its dashboard prominently hosted on QuickSwap, featuring several key Polygon decentralized applications.

This joint endeavor is set to expedite the development and deployment of decentralized apps (dApps), targeting an expansive onboarding onto the open web. The collaboration underscores a significant commitment to enhancing the discoverability of applications within the Polygon zkEVM ecosystem, all while utilizing the robust capabilities of NEAR’s Blockchain Operating System. This partnership is a step forward in equipping developers with the cutting-edge tools inherent to zero-knowledge technology.

The challenge for NEAR Protocol is twofold. First, it must convince developers and enterprises to build on its platform, demonstrating clear advantages over existing methods and alternatives. Second, it must navigate the complex regulatory environment surrounding blockchain technologies, which can be a significant barrier to adoption.

While NEAR Protocol has potential and unique offerings, it will need strategic positioning, continuous innovation, and a keen understanding of the evolving blockchain landscape to become a dominant player in the market.

Technology

NEAR Protocol operates on a community-run cloud infrastructure designed for deploying and running decentralized applications. It blends the characteristics of a decentralized database with those of a serverless compute platform, allowing developers to create censorship-resistant back-ends for high-stakes data applications such as money, identity, and assets.

The infrastructure comprises potentially infinite “nodes” run by individuals and organizations globally, offering portions of their CPU and hard drive space. Developers deploy smart contracts to this cloud as if deploying to a single server, resulting in an application running as long as a handful of NEAR community members continue to exist.

NEAR Protocol uses a proof-of-stake consensus mechanism, where node operators willingly put a portion of value at risk to ensure good behavior. The native asset of the NEAR ecosystem is the NEAR token.

The platform supports the storage of unique digital assets — including other tokens (wrapped or created atop NEAR) and non-fungible tokens (NFTs). Applications can securely store their state (data) on the platform, much like Ethereum.

NEAR supports Rust and AssemblyScript for writing smart contracts and provides a complete SDK for a great developer experience. It also leverages Gitpod to offer zero-time onboarding for developers. It provides various tools, including NEAR Wallet and NEAR Explorer, to aid users and developers in network interaction, contract debugging, and understanding network performance.

The protocol provides several tools to facilitate its use by developers and end users, including NEAR SDKs, Gitpod for NEAR, NEAR Wallet, NEAR Explorer, and NEAR Command Line Tools.

Tokenomics

NEAR Protocol is a community-operated cloud infrastructure for deploying and running decentralized applications. Its native cryptocurrency is the NEAR token, used to pay for processing transactions, storing data, staking to run a validating node, and voting on various governance-related issues like how network resources are allocated and the platform’s future technical direction.

For operations requiring computation, network usage, or storage, payment is made to the platform through fees distributed among its community of validating nodes. This includes creating new accounts, deploying new contracts, executing code by a contract, and storing or modifying data by a contract.

The total supply of NEAR tokens as of 2023 is approximately 1.1 billion, with an annual inflation rate of around 5%. Of the total supply, 11% was allocated to the early ecosystem, 17.2% to community grants and programs, 14% to the NEAR Foundation, and the remainder to various other stakeholders, including backers and employees.

NEAR’s tokenomics design facilitates long-term stability and growth in several ways. The inflation rate provides ongoing rewards for network validators, incentivizing their participation and thus securing the network. At the same time, some transaction fees are burned, which puts deflationary pressure on the NEAR token supply and can potentially increase its value over time.

This balance between inflation and deflation aims to foster a stable and sustainable economy within the NEAR ecosystem.

Team & Investors

Alexander Skidanov and Illia Polosukhin founded and launched NEAR Protocol in 2017 — both have a strong background in technology and blockchain. Skidanov is a two-time ICPC coding finalist who has previously worked at Microsoft. Meanwhile, Polosukhin has served in leadership positions at Nvidia and Google, where he led the TensorFlow machine learning team. The two are thought leaders in blockchain technology due to their expertise and experience.

NEAR Protocol has attracted investment from prominent figures and organizations in the blockchain and technology industries. The project has received backing from Electric Capital, Pantera Capital, and MetaStable, among others, since its inception in 2017. It has raised over $533 million across roughly eight funding rounds — the most recent funding round took place in April 2022, where it raised $350 million.

Partnerships

NEAR Protocol has established strategic partnerships with Web2 and Web3 players to promote its growth and interoperability. The NEAR Foundation has been actively expanding its global footprint via high-profile partnerships in the gaming, retail, and automotive industries that aim to bridge the gap between the two sectors.

In the web3 arena, NEAR Protocol recently partnered with Polygon to launch the latter’s zKEVM on its BOS. The partnership is a significant milestone in NEAR’s goal of becoming an open BOS and bringing together developers and users from multiple ecosystems in one place for ease of access.

It has also teamed up with various organizations like The Graph, a decentralized protocol for indexing and querying data from blockchains, and Keyko, a web3 services provider. NEAR has also partnered with Aurora, a project on the NEAR Protocol that provides an Ethereum-compatible smart contract capability. It aims to expand NEAR’s reach by facilitating the migration of Ethereum DApps and assets to the NEAR platform.

Furthermore, NEAR has formed alliances with several DeFi projects, including Ref Finance, Paras, and Mintbase, to foster a more vibrant ecosystem and enable a broader range of use cases on the platform.

Some of its recent partnerships also include a prominent collaboration with MARBLEX, a blockchain subsidiary of Netmarble Corp. The partnership aims to amplify Korea’s Web3 gaming landscape. Utilizing Aurora, NEAR’s Ethereum-compatible layer, the partnership endeavors to bring more gamers to Web3, with the WARP Bridge serving as a key component in presenting diverse gaming experiences.

NEAR has also entered a strategic alliance with Alibaba Cloud, targeting growth in the Asian and Middle Eastern markets. This collaboration taps into Alibaba Cloud’s extensive developer ecosystem, emphasizing multi-chain indexing and remote procedure calls (RPC) for developers on the NEAR protocol.

Another significant development is NEAR’s investment in Cosmose AI, a leader in AI-driven retail technology. By integrating NEAR’s Blockchain Operating System (BOS) with AI, Cosmose is set to redefine retail personalization while ensuring utmost data security. Their flagship application, KaiKai, stands as a testament to this revolutionary Web3 approach.

In the automobile domain, NEAR ushered Škoda India into the NFT space with the launch of Škodaverse India, further blurring the lines between digital engagement and automotive innovation.

Audits & Security

NEAR Protocol employs a unique consensus mechanism called Nightshade, which contributes significantly to its security features. Nightshade utilizes a version of the Proof-of-Stake (PoS) model, where node operators stake NEAR tokens as a security deposit. If a node behaves maliciously, its stake is forfeited, incentivizing good behavior and maintaining the integrity of the network.

NEAR supports Rust and AssemblyScript (a type of JavaScript) as the main languages to develop smart contracts on the platform. Both are statically-typed languages known for their security and performance. By offering familiar languages, NEAR allows developers to leverage existing toolkits and best practices to build secure applications, reducing the risk of vulnerabilities in contract code.

Overall, NEAR Protocol’s security features, including its consensus mechanism, choice of smart contract languages, and likely ongoing audits, contribute to the platform’s reliability and safety. This assures both developers and end users, promoting trust in the platform and its applications.

Product Roadmap

NEAR Protocol has evolved significantly since its main net launch in October 2020, and more than 20 protocol upgrades have been carried out live since — the most recent being the launch of Sharding Phase 1.

The platform is divided into two main sections: the Experience section, which focuses on user and developer experience, and the Core section, which is dedicated to improving the scalability and decentralization of the protocol.

NEAR Protocol has published a roadmap for the next two years with the goal of enhancing the platform’s user experience and core functionalities. Notably, this includes the launch of Phase 2 of sharding, which will scale the network to 100 shards without any validators tracking all shards. It is scheduled to go live sometime in 2023.

The roadmap also includes the delivery of Phase 3 of sharding in 2024. Phase 3 will dynamically adjust the number of shards based on demand.

The primary goals for the platform in the near term are to develop Meta transactions, zero-balance accounts, Secp256r1 keys, and global storage. In conjunction, these services will allow users to interact with dapps built on NEAR without the prerequisite of owning its native token. They will also streamline user onboarding and the creation of new accounts on the network.

Risks & Opportunities

To properly evaluate the risks and opportunities associated with Near Protocol, it’s essential to understand its strengths, weaknesses, and the market in which it operates.

Strengths

• Blockchain Operating System: NEAR is positioning itself to become the blockchain operating system of the Web3 industry. This significantly reduces the competition it faces in the space from established Layer-1 networks like Ethereum and Polygon, as they can benefit from its features.
• Sharding: NEAR Protocol employs sharding to partition data into smaller pieces, which makes it more manageable and helps process it more efficiently. This could offer Near Protocol a significant scalability advantage over competitors not using sharding.
• Usability: NEAR Protocol is designed to provide a developer-friendly platform. This could attract more developers to build on it and increase its use cases.
• Sustainable Economics: NEAR Protocol uses a Proof-of-Stake (PoS) consensus mechanism, which is seen as a more sustainable and scalable solution than the Proof-of-Work (PoW) mechanisms used by Bitcoin and other blockchain networks.
• Dynamic Resharding: NEAR Protocol plans to implement dynamic resharding, allowing the network to adjust to demand and scale efficiently.

Weaknesses

• Competition: NEAR Protocol faces competition from other smart contract platforms like Ethereum, Polkadot, and Cardano, which have established user bases and developer communities. However, this is minimized to a significant degree when considering NEAR’s strengths as a BOS and its goal of collaborating with these networks.
• Adoption: As a newer platform, NEAR Protocol needs to convince developers and users to migrate from other platforms. This could be challenging, given the network effects of more established platforms.
• Technical Risks: Implementing sharding and PoS introduces technical risks and complexities. If these technologies do not perform as expected, it could harm Near Protocol’s reputation and utility.

Opportunities

• Growth of Decentralized Finance (DeFi): The DeFi market continues to grow rapidly, offering NEAR Protocol a significant opportunity if it can establish itself as a reliable and efficient platform for DeFi applications.
• Scalability Challenges of Competitors: If competitors like Ethereum struggle to solve their scalability issues, it could present an opportunity for NEAR Protocol to gain market share.

Risks

• Regulation: As with all cryptocurrencies, regulatory risk is a significant concern. Any adverse regulatory developments could impact NEAR Protocol’s growth and adoption.
• Failure to Deliver on Promises: If NEAR Protocol fails to deliver on its ambitious goals, such as implementing dynamic resharding, it could lose credibility and market share.
• Security Risks: All blockchain platforms face potential security risks. Any security breaches could damage NEAR  Protocol’s reputation and lead to a loss of user trust.

Near Protocol has some promising technologies and features that could position it well in the competitive landscape of blockchain platforms. However, it also faces significant challenges and risks. Its long-term success will likely depend on its ability to effectively implement technological advancements, attract a strong developer community, and navigate regulatory challenges.

Conclusion

NEAR Protocol has shown significant potential as a unique blockchain platform in the market due to several key factors:

Technology

NEAR Protocol recently launched the Blockchain Operating System (BOS), a major milestone that positions it as a common layer for creating and discovering Open Web experiences across all blockchains.

The BOS is designed to make it easier for web2 applications and communities to tap into the opportunities of web3, providing a richer, more sustainable experience for both developers and end users. It also enables developers to create and code interfaces in a single environment with the ability to fork a host of components to build apps faster and more efficiently than ever before.

The launch of the BOS and the alpha.nearpages platform has generated excitement in the industry, with notable figures from Pantera Capital, Redpoint, and a16z crypto acknowledging NEAR’s innovation.

Team

The NEAR Protocol team is described as world-class, focusing on maximizing the fundamentals and convictions of the network. Their strategy is centered on achieving mainstream adoption by focusing on users and facilitating the conversion of key web2 projects to web3. The team’s talent and technology are critical drivers of growth and development for the NEAR Protocol and its ecosystem.

Partnerships

NEAR Foundation has established partnerships with major applications and brands, working on real use cases that drive engagement on the NEAR Protocol. Some notable partnerships include Google Cloud, Grupo Nutresa, and Sweat Economy. The foundation’s top-down approach to partnerships, led by a world-class business development team, has been instrumental in these collaborations.

Progress

The NEAR Protocol has demonstrated significant growth. Despite not meeting its 2 million monthly active accounts (MAAs) goal in Q1 2023, it recorded just under 1 million MAAs. The NEAR Foundation expects just over 1.5M MAAs in Q2, with a path to 10M by the end of 2023.

Key achievements in Q1 2023 include the growth of Twitter followers (175K per month), the launch of grassroots Decentralized Autonomous Organizations (DAOs), the initiation of the NEAR Horizon early-stage accelerator, and the management of the treasury, which totaled $1.1 billion at the end of Q1 2023.

During this period, the network gained 1.5 million new accounts and conducted 25 million transactions.

NEAR Protocol has distinguished itself with its unique technology and strategic partnerships, a strong team, and significant progress in its ecosystem. These factors suggest that NEAR Protocol is well-positioned to become a significant player in the broader cryptocurrency market. However, the full potential of the NEAR Protocol will be more evident as the announced partnerships go live and the technology is adopted more widely. In the meantime, it’s also essential to keep an eye on the broader market conditions, as they can influence the performance and progress of NEAR Protocol.