The future of blockchain technology is NEAR.
Authored by: @hetty-rowan
Is the moment that people move away from Ethereum NEAR
New projects come along every day. And every day there is one that calls itself Ethereum Killer, and every day there are other people who label a project as Ethereum Killer. Now I've said many times before that I don't believe in Ethereum Killers at all, that opinion still stands… because I just believe that all projects have their own strengths and weaknesses, can complement each other and can and will coexist. But sometimes, sometimes you come across something where you think, “hmmm this project is really good, maybe this time the change of mindset for people to shift from Ethereum towards another project could be really near”
And then we arrived at the project that I want to show you today. Probably some of you have heard of it or even dealt with it. If not? ...
Then the moment is NEAR.
And what is NEAR actually?
In the crypto corridors, NEAR is called an Ethereum killer. This is because the protocol with the possibilities it offers could surpass Ethereum (ETH). In any case, the name of this promising development platform raises a lot of philosophical questions.
This blockchain platform is said to get its name from the title "The Singularity is Near," from the book by futurist Ray Kurzweil. In this book, Kurzweil describes a near future in which the biological and technological elements increasingly merge in humans.
NEAR wants to bring this near future a bit closer by making the tools for further technological development in the blockchain accessible.
What are the characteristics of the NEAR protocol?
Although the premise of the name is quite philosophical, NEAR as a platform is mainly very practical. Apart from the philosophical questions of life, NEAR is a platform that especially makes life easier for developers and ordinary people. In fact, it offers the opportunity to turn an ordinary person into a developer.
NEAR is a smart contract development platform and is therefore comparable to the Ethereum ecosystem. The layer of the NEAR network provides the basis, the foundation, on which dApps and other DeFi (Decentralized Finance) applications can be developed. dApps are decentralized applications that can be used for all kinds of purposes. Near is a suitable platform in particular for DeFi applications or gaming.
In addition to the network, the platform offers all kinds of tools to develop dApps quickly and easily. This makes it possible for users without much knowledge about blockchain technology to develop their own dApp. The platform has implementations for smart contracts, NFTs, but also for creating a guestbook.
Scaling up your applications so that they can handle larger numbers of users can be done via NEAR without much extra effort or cost. You see: the possibilities are endless and user-friendliness is one of the spearheads of NEAR.
But the main thing that makes NEAR a standout development platform is its speed. With this, the developers set a standard that will be quite a challenge for Ethereum 2.0. Scalability, the ability to handle different transactions with sufficient speed per unit of time, is one of the current challenges.
This is one of the major criticisms of Ethereum, which first started offering smart contracts. With the growth and with it the number of transactions, scalability for the Ethereum network is becoming a problem. NEAR offers the solution for this. We will take a closer look at how this is possible when discussing the technology behind NEAR.
The cost of using the NEAR protocol is also one of the reasons that makes this platform attractive to developers. They also rival Ethereum in this respect. Due to the high speed at which transactions can be processed and the large number of transactions that the NEAR protocol can handle, the costs are also many times lower.
Which is also not unimportant in these times: NEAR wants to be climate neutral operational. Sustainable projects are supported as compensation for the damage caused by the energy consumption of the platform. Energy consumption cannot always be prevented, but by means of compensation you can function climate neutral according to the philosophy of the developers of NEAR.
What is the technology behind NEAR?
NEAR thus has a few notable features that make it stand out among other blockchain projects. This is due to the expertly conceived technology that we will now delve into more deeply.
Sharding mechanism Nightshade
The NEAR protocol works with the consensus system which has been given the name Nightshade. All blockchains operate on the basis of a certain consensus, an agreement that must be met in order for a add block or transaction. This is a verification method so you know that no duplicate blocks or transactions are created. In the case of the NEAR protocol, this is done by means of Proof of Authority (PoA). This involves verifying so-called validators, these are the nodes in the network, the blocks and transactions. And the agreement is reached based on the reputation of the validators. They have proven to be reliable validators. The advantage of the Proof of Authority method is that it is a fast method of building blocks.
Nightshade further executes the consensus mechanism based on sharding. It is a mechanism that ensures that the transaction speed of a blockchain remains up to the mark, even if many transactions have to be handled.
How do you make a task like, say, checking and putting away transactions faster? One way is that you divide the tasks between a block which does the main tasks and a block which does the side tasks. This is a construction with sidechains and mainchain.
Another method, the NEAR way, is to divide the large block into smaller units: sharding. This is applied in the NEAR protocol. The developers of NEAR have adopted the sharding technique from database technology, where this is already being used much more. It is a technique in which a data unit is divided into smaller units which improves the speed of the transaction. This sharding is done horizontally, ie each packet contains a portion with the same information. Nightshade ensures that the chunks together form 1 blockchain.
How does this work in practice? Suppose you have 3 nodes A, B, C and you need to verify data X. By dividing data X into 3 equal pieces X1, X2, and X3, the 3 nodes can simultaneously validate the 3 pieces of data X. This works faster and more efficiently.
The Ethereum development team has been working for some time to increase the scalability of Ethereum because this is one of the bottlenecks for this blockchain ecosystem. Ethereum 2.0 with the developed Beacon Chain should be the solution for this. The speed of 1000,000 transactions per second that is achieved with Ethereum 2.0 is also feasible for NEAR's Nightshade. This means that the NEAR protocol certainly has the potential to become an equal of Ethereum.
Doomslug for the block production
Doomslug is the mechanism NEAR has for block production. In turn, the various validators stake NEAR tokens. They do this in the amount of tokens they have at their disposal. The blocks are completed if there is an agreement between the validators that a block is correct. The production of a block by doomslug is irreversible. To review a production, at least one of the participating validators must be slashed.
The penalty, slashing, consists within the NEAR protocol that a validator has temporarily lost its place. Slashing occurs when a validator produces less than 90% of the expected blocks or would create "false" or duplicate blocks. The production mechanism continues to work as long as half of the participating validators are present and reliable.
In practice, the doomslug mechanism works like this: participant 1 starts producing block h1. When this participant is finished with this block, he sends the confirmation to the next participant, participant 2. This participant must respond within a certain time by also producing a block. If this does not happen within the agreed time, a message is forwarded to the next participant 3, stating that participant 2 has not picked it up. If this participant has received a confirmation or a referral message from half of the participants, that is the green light to start the next block.
The doomslug method works more efficiently and faster with less communication than other protocols that use the validation system. In other ecosystems that produce the blocks through the system with validators, 2/3 of the participating validators must give approval. If this does not happen, the whole procedure has to be repeated. With the NEAR protocol, half of the validators are needed and only when a validator is slashed, it has to be restarted.
Rainbow Bridge for exchange with the Ethereum blockchain
Doomslug, Nightshade: If the NEAR developers don't continue developing innovative blockchain technology, they could always start out as a metal band, because they definitely have a connection to the dark side of things. Rainbow Bridge sounds a lot happier. A rainbow stands for connection and that is exactly the intention of this innovation.
The Rainbowbridge is the bridge, a connection mechanism that allows the Ethereum blockchain and the NEAR blockchain to function interoperably. ECR20 tokens and NFTs can be transported between Ethereum and NEAR via the Rainbow.
What are examples of projects that use the NEAR protocol?
Although the NEAR ecosystem has only been launched since 2020, a number of leading projects are already using the protocol. For example, there is Mintable. This is a platform for minting and trading NFTs. Flux is an open market protocol. Both were initially developed within the Ethereum ecosystem. But the costs were too high on Ethereum, which became a barrier for users. That is why Flux and Mintable decided to switch to the NEAR protocol where, among other things, the gas fees are much more reasonable for users.
The token NEAR
The NEAR (NEAR) token was developed as a native token for the NEAR ecosystem. This is a type of token that is used in the ecosystem as a means of payment for developing dApps on the platform. The token is also needed for the validators to strike.
The token is also used as a reward system. Developers can also receive tokens by participating in the development of the platform. There are also competitions you can enter where you can earn NEAR tokens.
Furthermore, the tokens are also a reward for the validators and delegators. Validators get it for running the nodes. So they have to invest tokens to be able to validate as a node, but this ultimately yields more tokens for their work as a validator. Delegators stake the tokens by holding them and making them available in validating pools. This reinforces the value and security of the token.
A total of 1 billion tokens were created in 2020. Of these, more than 390 million will be in circulation in 2021. Every year 5% extra inventory is created. Of this 5%, 90% goes to the validators and 10% to the treasury protocol. Adjustments to the protocol are funded from this. 30% of the transaction costs are paid as a discount on contracts and the remaining 70% is burned. Burning is to prevent inflation. Tokens will then be removed from circulation forever. The value when the token was launched in October 2020 was USD 1.18. The token has reached an All Time High of USD 7.22 in March 2021.
The tokens were distributed in 4 private sales from 2017 to 2019. In 2020 there was the community sale.
The sales looked like this:
- 2017 - Privat Sale 1 - 21.6 million tokens distributed for 0.0375 USD per token, total proceeds 810,000 USD. The vesting schedule, this is the distribution of the tokens over a period, is not known
- 2018 - Privat Sale 2 - 57.6 million tokens distributed at 0.0500 USD per token, total proceeds 2.880.000 USD. Fortification schedule unknown
- 2019 - Privat Sale 3 - 70.66 million tokens distributed for 0.120 per token, total proceeds 8.480.000.00 USD. Fortification schedule unknown
- 2019 - Privat Sale 4 - 2.5 million tokens distributed at 0.15 per token, total proceeds 375,000 USD. Fortification schedule unknown
- 2019 - Serie A - 84 million tokens distributed for different prices per fortress scheme
- Option 1 USD 0.25 per token for a 36 month vesting schedule, total yield USD 18,933,487.
- Option 2 0.29 USD per token for a 24 month vesting schedule, total yield 659,863 USD.
- Option 3 USD 0.32 per token for a 12 month vesting schedule, total yield USD 2,003,155.
The NEAR token is available on major exchange platforms such as Binance, Huobi exchange and Gate.io. The token can be stored in a NEAR wallet developed in-house. The wallet is also an account that you can use if you want to develop dApps on the NEAR network.
The NEAR protocol started from a machine learning project with the same title of the founders Illia Polosukhin and Alexander Skidanov. The project was an exploration of the possibilities of program synthesis, in short, the idea that computers can automatically develop programs themselves. From here the research grew into a platform with programmed smart contracts and crypto payments. This was around 2017-2018 and from this the white paper for the NEAR protocol was written. Simple to use but usable on a large scale were the basic values that the ecosystem had to adhere to.
The network was launched in April 2020. The platform initially worked without tokens, the nodes were then still served from the NEAR Foundation. With the transition to community driven governance, the tokens were launched in October 2020.
2018 Illia Polosukhin and Alexander Skidanov put together a team to realize NEAR.
April 2020: Mainnet phase 0 PoA genesis. This was the first phase of the mainnet rollout. The nodes are controlled from the NEAR foundation.
September 2020: Mainnet confirmed phase 1
October 2020: Mainnet phase 2 governance is transferred to the community
April 2021: Rainbow Bridge launched
The roadmap being developed by the developers is used as a guideline, but since October 2020 it has increasingly been the community that drives and contributes ideas.
Founders and organization
The 2 original founders of NEAR have a significant track record. Alex Skidanov worked at Google, among others, where he wrote various research papers to optimize Google Search. Poluskin worked at Microsoft for a long time. At MemSLQ he was the first engineer and worked there as an architect engineering. The full team currently consists of 68 people. NEAR is based in San Francisco.
NEAR Foundation in Switzerland and NEAR inc. in San Francisco are the 2 organizations from which the development is directed. From October 2020 this will be done from the community.
The community is an important part in the further development of the NEAR protocol. The meerkat, the near cat within the NEAR community, is the mascot of the protocol because you will encounter this animal everywhere on the site. It also seems that the developers around NEAR are eager to develop a community like a meerkat family. These animals are very social and each contribute their own bit to the group. The animals also pay a lot of attention to passing on knowledge, which is exactly the intention of the team behind NEAR. Now one can only hope that the example of Meerkat Finance is not followed.
For example, with the Whiteboard series on YouTube, the team wants to create an open development culture where ideas are better by sharing. The whiteboard series invites developers from different platforms to explain the technology and the solutions it offers.
The intention is that the NEAR protocol will be fully community driven in conjunction with a DAO (Decentralized Automated Organisation). This means that there is no central administration, anyone can make a proposal to adjust the protocol. The proposal is then discussed in the NEAR forum and everyone is also allowed to make adjustments or additions to the protocol. Ultimately, a vote is taken to accept or reject a proposal. Possession of the NEAR tokens gives the right to vote on a proposal.
In October 2020, the transfer of governance from the NEAR Foundation to the community started. What the board will look like over the years has not yet been fully crystallized.
The project had a lot of interest from important investors in blockchain projects, which is why you come across investors in a row.
- Pantera Capital
- Multicoin Capital
- Fundamental Labs
- IDEO Colab
- a16z Crypto
- Metastable Capital
- Coinbase Ventures
Near has a solid team of developers who all play at the Champions League level of blockchain development, so to speak. This made an impression and the successful pre-sales show that there is a lot of confidence in the project. Mintbase and Flux are projects that are already successful thanks to NEAR.
Of course, the question always remains whether the platform can continue to live up to these expectations. Ethereum killer, a term used for blockchain projects that can overrule Ethereum (ETH) as the smart contract ecosystem, is a title that creates great anticipation. The NEAR protocol has yet to deliver on promises and the future will tell whether the protocol will live up to the great expectations with which it was launched. The danger is that there is such a hype that it is almost impossible to live up to it.
NEAR is a promising project developed by a star team. The solutions for scalability, the ingenious technology in combination with the great ease of use are particularly striking.
But it remains to be seen whether all the beautiful plans will continue to work. How distinctive will NEAR remain if, for example, 2.0 of Ethereum manages to live up to all expectations in the field of scalability, sustainability and costs? For now, NEAR brings the possibilities of blockchain technology one step closer. The future of blockchain technology is NEAR.
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