What is NEAR Protocol?
Before we talk about why NEAR Protocol is bullish in 2022, lets go back to where it started. Founded in 2018 by Alexander Skidanov and Illia Polosukhin. 14 October 2020 saw their mainnet going live with 160 million $NEAR tokens being staked within the first 24 hours.
The team’s mission is to enable community-driven innovation to benefit people around the world. To accomplish this, NEAR uses a high performance sharded proof-of-stake blockchain which can processes 100,000 transaction in a second.
On top of that, burning of transactions fees makes the token deflationary unless involved in smart contracts where portion of the fee are given to the creator.
NEAR Protocol sharding mechanism
NEAR uses a sharding mechanism called nightshade.
Modelled as a single blockchain, each block logically contains all the transactions for all the shards, and changes the whole state of all the shards.
Every block produced on NEAR blockchain is almost like snapshots on transactions which happen in each shard.
NEAR Protocol sharding roadmap for 2022
Phase 0: Simple Nightshade
In November 2021, NEAR announced the first phase of Nightshade, called Simple Nightshade. Upon completion, Nightshade will make it super-fast, incredibly secure, and capable of onboarding millions of users into the world of Web3 without skipping a beat.
Currently, Simple Nightshade splits NEAR protocol into four shards, shared amongst the same 60 over validators, increasing its transaction throughput over 4x.
NEAR’s Nightshade Sharding allows NEAR Protocol to scale linearly with the number of shards, thereby having the ability to satisfy the demand for transactions as more and more users start to use NEAR.
Ultimately, it prepares NEAR for mass consumer adoption of billions of users.
Phase 1: Further decentralization, chunk-only producers
In this phase the NEAR team’s main focus is on the validation of existing shards. The introduction of chunk-only producers also helps increase the total number of validators and improve the decentralization of NEAR as a whole.
This phase will expect 200-400 validators and only a fraction of them (block producers) needed to run more expensive hardware. They are all expected to deliver Phase 1 in January 2022.
Phase 2: Nightshade
Phase 2 will focus on increasing accessibility for validators. Eliminating the need for any validators to track all the shards in both state and its processing will be fully sharded.
This will also further lower the hardware requirements of running a block producer on NEAR, making the network more accessible for validators. Nightshade is expected to deliver Phase 2 in Q3 2022.
Phase 3: Dynamic resharding
In Phase 3, the team aims to expand on the ability for the network to dynamically split and merge shards based on resource utilization.
This will make NEAR almost infinitely more scalable and resilient to short-term usage spikes. Phase 3 is expected to deliver phase 3 in Q4 2022.
Sharding is not the final phase of evolution for NEAR Protocol. The NEAR team is simultaneously working on a number of improvements on the protocol level to build a secure, developer-friendly, and scalable blockchain that can support mainstream usage and adoption.
Why I am bullish on NEAR protocol
1. NEAR Protocol and Three Arrows Capital
NEAR Protocol has recently closed a US$150 million capital raise by Three Arrows Capital. The funding will be used to accelerate its mission of helping people learn, use and adopt Web3 technologies.
With reach in established communities in Asia, Africa and Europe, its aims to expand support to emerging communities like India and Turkey.
2. Rainbow Bridge: NEAR Protocol and Ethereum
NEAR Protocol has its own native virtual machine to run smart contracts. The EVM provided by Aurora will provide an Ethereum layer-2 experience on the NEAR protocol. This translates to a solution for developers seeking to extend dApps to reach additional markets.
Completing Rainbow Bridge, it is possible to bridge ERC20 tokens now between NEAR blockchain and ETH. Fees on the Ethereum network has always been soaring however Rainbow Bridge would allow users to seamlessly migrate assets, NFTs, to NEAR’s low cost platform.
Aurora uses the rainbow bridge to facilitate the migration of assets between supported networks. This has quickly become popular a protocol for cross chain transfers with more than 732million in total value locked.
3. NEAR’s expanding ecosystem
There has been an increase in the number of projects launched or bridged to the NEAR network over the past two months. NEAR is also the third-fastest growing developer community across the whole of the cryptocurrency ecosystem, with the fact that developers on NEAR get 30% of the transaction fees spent on their contract.
The expanding developer community along with the release of a cross-chain bridge has led to an expansion of the NEAR ecosystem. Here are few of the projects and collaborations NEAR protocol has made.
– NEAR’s decentralized storage with Filecoin, $FIL
Filecoin is a decentralized peer-to-peer data network, allowing anyone to store or validate data within its network.
In a joint offering of US$300,000 to developers, they are looking for projects which demonstrates integration between Filecoin and NEAR. Potential areas are related to Decentralized Storage SDK, Database APIs and New Web3 Applications.
– NEAR supported by the Opera browser
Opera announced its plan to add support for NEAR protocol with its native cryptocurrency wallet called opera touch. This integration will allow users to send transactions 1000 times cheaper than on the Ethereum network.
– Ardana and NEAR protocol
Through this partnership with NEAR, which includes a grant, Ardana will build the bridge infrastructure required for asset transfer between Cardano and NEAR.
By connecting Cardano and NEAR and supporting integrations between projects on both ecosystems, Ardana will enable token transfers between the NEAR and Cardano blockchains.
This enables cross-chain smart contract functionality. The NEAR coin will also eventually be available as an asset on Cardano, which will be usable as collateral on Ardana to mint stablecoins.
– deadmau5 NFT with NEAR Protocol
Half of the NFTs (500,000) are being sold on Mintbase for 0.25 $NEAR per piece, which was $2.19. The remaining half million will be sold as additional awards with ground-breaking benefits.
The ‘Ultimate Bundle’ includes 50,000 NFTs, artwork, a limited edition NFT, a merchandise pack and a highly-prized spot on the guest-list for a forthcoming deadmau5 show.
Concerns about NEAR Protocol
This brings me to the concern I have about NEAR Protocol, the first concern being participation.
Despite all the developments, updated announcements, investments, and a fairly sizable following, NEAR Protocol does not seem to have a very large user base.
This must be due to the fact that NEAR token is not currently trading on any US exchange. They are not decentralized enough to be considered a security by the SEC.
This is a problem because NEAR Protocol is based in the United States as there are probably thousands of individuals and institutions in the US who are itching to get their hands on the NEAR coin.
“With multichain interoperability of Rainbow Bridge, Aurora (EVM), Octopus (Substrate), and NEAR native’s Nightshade sharding technology, NEAR is best suited for empowering blockchain applications for mainstream adoption,”Amos Zhang, founder of Metaweb.vc
With all its buzz, investor backing and solid solutions in solving transaction speeds, limited throughputs and compatibility. 2022 will be bright for NEAR protocol. By rolling out its fully build system of Nightshade, they would be a protocol which scales almost unlimitedly.
To be honest, I think NEAR Protocol probably has the most advanced technology of any cryptocurrency project. The team building its blockchain is probably the most talented team on the planet. I’m not being hyperbolic. These guys are seriously smart. Perhaps when NEAR is able to reach into the community of retail investors, by creating value on the network they provide, they would see massive price action on top of all the promising partnerships installed for them in 2022.
Featured Image Credit: Chain Debrief