NEAR Protocol

What is NEAR Protocol (NEAR)?

NEAR Protocol is a layer-1 blockchain built to host decentralized applications and solve some of the biggest problems in the blockchain industry.

Known for combining technology, efficient consensus, and a tight economic system, NEAR Protocol strives to offer both individuals and businesses an accessible blockchain platform.

NEAR has a team of over 100 employees called the NEAR Collective and is held by over 14 million accounts globally. NEAR Protocol is one of the most popular decentralized finance blockchains that isn’t based on the Ethereum Virtual Machine, with $590 million locked in the protocol as of May 2022.

When Was NEAR Protocol Launched?

NEAR Protocol’s mainnet was launched on April 22, 2020, and 1 billion NEAR tokens were issued at genesis.

Originally conceived in 2017 as a machine learning platform called Near.ai, NEAR was able to raise $50 million in funding prior to the beginning of any development work.

The evolution of NEAR came as a result of centralization in web infrastructure. Web application development is dependent on the cloud duopoly of Microsoft Azure and Amazon Web Services.

Given this structure, user data is at risk of censorship, amendment, hacking, or sale by the controlling parties. Decentralization of cloud platforms eliminates this risk, and this is one of the problems that NEAR attempts to solve.

Who are the Founders of NEAR Protocol?

Illia Polosukhin and Alexander Skidanov originally created the NEAR Protocol as an internal solution to fulfill their machine learning needs. Polosukhin, a former employee of Google, has a Master’s degree in Applied Math and Computer Sciences. Meanwhile, Skidanov, formerly of Microsoft and MemSQL, is an ICPC gold medal winner.

How Does NEAR Protocol Work?

NEAR Protocol is a layer-1 blockchain, meaning that it relies on a high-speed, secure, and efficient main chain without depending on sidechains or other solutions for scalability.

NEAR is, at its heart, a proof-of-stake blockchain that relies on validating nodes coming to a consensus about the network. To become a validator, users need to lock, or stake, a certain number of NEAR tokens.

Malicious actors on the network have their stakes slashed, or destroyed, while validators who act according to the protocol are rewarded with a yield of a little over 11% APY.

NEAR’s consensus mechanism is called Doomslug. It boosts efficiency by ensuring that blocks achieve finality within seconds.

NEAR Protocol has deployed several cross-chain solutions, such as Aurora EVM and Octopus Network, that allow assets to be transferred seamlessly between NEAR and several other blockchains, including Bitcoin and Ethereum.

Instead of the current internet cloud architecture that is controlled by corporations, NEAR creates a community-operated cloud by connecting decentralized nodes.

This allows application developers peace of mind since no single central entity can shut them down. Moreover, it allows end users the benefit of open source code, where everything can be inspected before any interactions.

What Makes NEAR Protocol Unique?

NEAR Protocol has many things going for it, but first and foremost, it does the basics well.

With a throughput of up to 100,000 transactions per second, it has the potential to scale very well. This solves one of the biggest problems that other more popular blockchains are plagued by.

What’s more, NEAR carries out its many transactions at high speed. A finality of just one second can be achieved by Doomslug, limiting the maximum amount of gas per block.

Aside from speed and scale, NEAR is also cheap to use. Transaction fees compensate validators but remain extremely low, costing just a fraction of a cent to complete.

NEAR also allows users to set up simple account IDs rather than public key hashes. Most blockchains use hashes that users need to copy and paste, given how hard they are to remember.

NEAR lets users create their own alphanumeric IDs from between 2–64 characters in length and ending with the extension .near (for example, 123abc.near).

How is the NEAR Protocol Network Secured?

NEAR Protocol uses a sharded proof-of-stake (PoS) system to achieve consensus. PoS allows validators to come to a consensus about the network state by incentivizing good actors and penalizing bad actors.

Sharding, meanwhile, means that the whole is divided into small parts. This allows a layer-1 blockchain like NEAR to achieve mass scaling. NEAR processes multiple blocks in parallel across multiple shards via a sharding design referred to as Nightshade.

Nightshade gives NEAR Protocol the ability to process tens of thousands of transactions per second by dividing each block on the blockchain into shards that process batches of data called chunks.

These chunks contain transactions, and each block contains chunk headers that summarize these transactions.

What is the Use of NEAR?

The NEAR token is mainly used for paying gas fees to power transactions and smart contract calls on the blockchain. Since NEAR Protocol is secured by proof-of-stake, NEAR tokens can also be staked.

Smallholders can also delegate NEAR to validators to earn a share of the NEAR token emission. NEAR is also used for governance on the network, with all holders having a voice in how network resources are allocated.

Who Controls NEAR Protocol?

NEAR Protocol is controlled by the NEAR Collective, a globally distributed group of teams responsible for writing the open-source code for NEAR Protocol.

However, NEAR is designed to be decentralized. While the Collective writes code and proposes changes, these changes have to be accepted by the independent validators responsible for network consensus.

The NEAR Foundation is one notable member of the Collective. It is a non-profit organization aiming to build a long-term ecosystem around the NEAR protocol.

How Much NEAR Is In Circulation?

NEAR was launched with 1 billion NEAR at genesis, with each NEAR being divisible into 1024 yocto.

NEAR has been funded across eight different rounds, raising over $500 million for its development. However, the January 13, 2022 funding round was led by Three Arrows Capital, which has since filed for bankruptcy amid stories of its founders absconding.

As of May 2022, close to 69% of NEAR’s total 1 billion supply was in circulation.

How Do You Buy NEAR?

As a top cryptocurrency, NEAR is available for trading on many major cryptocurrency exchanges. It can also be purchased in a decentralized manner via dApps in the NEAR Protocol ecosystem.

NEAR can also be obtained via staking, with delegators and validators receiving a proportion of NEAR emission.

Is It Possible to Buy NEAR Instantly?

Thanks to the lightning-quick finality of NEAR Protocol, purchasing NEAR is a practically instantaneous experience. However, it may take longer to withdraw NEAR to a private wallet following a purchase on an exchange.

This is because many centralized exchanges have to perform Know Your Customer (KYC) and Anti-Money Laundering (AML) activities before they release funds for settlement.

How Do You Store NEAR?

Like most, if not all cryptocurrencies, NEAR can be stored in a cryptocurrency wallet. With its focus on cross-chain interoperability, the NEAR Collective has taken steps to make NEAR compatible with many major wallets.

Thanks to the Aurora mainnet, NEAR can be stored in popular wallets like Metamask, Trust Wallet, and Crypto.com’s DeFi wallet. The NEAR app can be used to store NEAR on Ledger as well.

The NEAR ecosystem also has its own native NEAR wallet, supported by the NEAR team.

NEAR Protocol Energy Consumption

NEAR Protocol is secured by a proof-of-stake consensus mechanism, which means that it does not require vast numbers of computers running at full steam to keep it up and running.

In fact, NEAR Protocol features 100 validators, which equates to just requiring 100 computers to stay online and keep the network going.

Like many PoS blockchains, this makes it extremely energy-efficient.

Is NEAR a Good Investment?

The NEAR token has been an exciting entrant to the cryptocurrency charts. It boasts significant investor interest given its claims of blazing speed, massive throughput, and significant decentralization.

If NEAR can indeed live up to this potential and go on to decentralize the cloud computing and storage industry, it may well prove to be an excellent investment.

However, risks remain given the profile of certain backers of NEAR, with Three Arrows Capital already in significant trouble.

Other backers, like Tiger Global, are struggling in 2022. They also have questionable ties, including with “Tiger Cub” Bill Hwang, who could face up to 380 years in prison following his arrest for fraud.