What is NEAR Protocol? New Premier Guide 2024

NEAR Protocol is an emerging blockchain platform committed to providing high-performance, low-cost solutions for decentralized application (DApp) development. This article will provide a detailed review of NEAR Protocol, exploring its technological architecture, performance features, security, and ecosystem advantages and potentials.

What is NEAR Protocol?

NEAR Protocol is a blockchain platform that achieves scalability using sharding technology. The protocol employs smart contracts and utilizes the Proof of Stake (PoS) consensus mechanism to secure the network. Founded in 2020 by Alex Skidanov and Illia Polosukhin, NEAR platform is built collaboratively by the NEAR team. The project’s direction is to establish community-operated cloud infrastructure for hosting decentralized applications (DApps).

The NEAR platform includes various programming tools that support different programming languages and run smart contracts with cross-chain capabilities to assist developers in building DApps. The platform simplifies the registration process by using readable account names instead of cryptographic wallet addresses. As a PoS blockchain, NEAR obtained the climate-neutral product label in 2021 for achieving carbon neutrality.

NEAR operates similarly to other centralized data storage systems (such as Amazon Web Services), which serve as the foundational layer for building applications. However, NEAR is not operated by a single entity but by a distributed network of computers.

Just as AWS allows developers to deploy code in the cloud without creating infrastructure, NEAR Protocol configures a similar architecture, including a network of computers and its native cryptocurrency, the NEAR token.

How does NEAR Protocol work?

NEAR Protocol is a Proof of Stake (PoS) blockchain that competes with other platforms with its sharding solution called “Nightshade.”

Nightshade Protocol

Nightshade Protocol is the core technology of the NEAR blockchain, which enhances data processing efficiency through sharding. Sharding refers to dividing transaction processing work into fragments and distributing them to multiple validator nodes. As a result, each node only needs to process a small portion of transactions in the network, increasing the transactions per second.

According to the Nightshade Protocol, block producers and validators on the NEAR platform simultaneously process transaction data on multiple shards. Each shard produces a portion of the next block, called a chunk. The NEAR Protocol blockchain processes and stores these chunks, completing the transactions recorded within them.

In theory, with the adoption of the Nightshade Protocol, the NEAR platform can process millions of transactions per second without affecting overall operations. The platform automatically splits or merges shards based on real-time network conditions, adjusting to network traffic and resource utilization to prevent transaction fee spikes.

Unlike other PoS networks, validators do not compete for the next block by staking. The NEAR platform uses the Thresholded Proof of Stake (TPoS) mechanism to select validators. Similar to an auction, a large number of interested validators declare how much NEAR tokens they are willing to stake through signed transaction submissions. Subsequently, TPoS determines the minimum stake required to become a validator in each time period (usually every 12 hours). Validators with stakes exceeding this threshold have a chance to be selected, and the probability of selection is proportional to the stake.

Rainbow Bridge

Rainbow Bridge is an application on NEAR that allows users to transfer ERC-20 tokens, stablecoins, wrapped tokens, and even non-fungible tokens between the Ethereum and NEAR blockchains. Developers and users can enjoy the convenience of high throughput and low-cost transactions brought by the NEAR Protocol.

Rainbow Bridge is a completely permissionless and decentralized application. When bridging tokens, users can directly transfer ERC-20 tokens from MetaMask or other Web3 wallets to NEAR wallets, or vice versa. Firstly, users need to deposit tokens under a smart contract on Ethereum. Since tokens cannot be transferred directly between networks, tokens are locked on Ethereum and taken out of circulation. New tokens are created on NEAR to represent the original tokens, keeping the total circulating supply of tokens consistent across both blockchains.

In most cases, transactions on NEAR are confirmed within 1-2 seconds and cost less than $1. However, if users want to transfer tokens back to Ethereum, it may take more time and money. The final cost depends on real-time traffic and gas fee prices on Ethereum.

Aurora

Aurora is a Layer 2 solution within the NEAR Protocol blockchain, designed to help developers expand applications on Ethereum-compatible platforms and reduce user transaction costs. According to NEAR, Aurora can process thousands of transactions per second and has a block confirmation time of only about two seconds.

With Aurora, Near takes a step towards its explicit goal of becoming “a network that empowers users to control their data, finances, and governance tools.”

Aurora consists of the Aurora Engine and the Aurora Bridge. The Aurora Engine is an Ethereum Virtual Machine (EVM) based on the NEAR Protocol, compatible with Ethereum and supports all available tools in the Ethereum ecosystem. This allows developers to easily onboard to the NEAR platform without rewriting DApps or learning how to use new development tools.

Developers can also use the Aurora Bridge (which has the same technology as the Rainbow Bridge) to seamlessly transfer smart contracts and ERC-20 tokens between Ethereum and NEAR Protocol blockchains. Users can also pay transaction fees with Ether on Aurora.

Performance Features

The performance features of NEAR Protocol are mainly reflected in the following aspects:

• High throughput: Using Nightshade sharding technology, NEAR Protocol achieves a high throughput blockchain network capable of supporting large-scale transaction processing.
• Low cost: Due to the use of sharding technology, transaction fees on the NEAR Protocol are relatively low, allowing developers and users to participate in blockchain applications at lower costs.
• Fast confirmation: Through sharding technology and optimized consensus algorithms, NEAR Protocol achieves fast transaction confirmation, improving user experience.

Security

NEAR Protocol emphasizes security and employs various technical means to ensure the security of the blockchain network:

• Adopting the BFT consensus algorithm: NEAR Protocol uses a Byzantine Fault Tolerance (BFT) consensus algorithm based on Proof of Stake to ensure the security and consistency of the network.
• Smart contract security: NEAR Protocol’s smart contracts adopt a secure programming model, reducing the risk of smart contract vulnerabilities through static analysis and code audits.
• Security audits: NEAR Protocol conducts regular security audits to identify and fix potential security vulnerabilities, ensuring the stable operation of the network.

Ecosystem of NEAR Protocol

The ecosystem of NEAR Protocol is continuously growing, covering various types of decentralized applications and development tools:

• Decentralized Finance (DeFi) applications: Many DeFi applications have emerged on the NEAR Protocol, including decentralized exchanges (DEXs), stablecoins, and lending platforms.
• Digital identity and authentication: NEAR Protocol provides rich development tools and support for digital identity and authentication, offering users secure and reliable identity management solutions.
• Developer tools and community support: NEAR Protocol offers a variety of developer tools and documentation, as well as active community support, providing developers with a good development environment and technical support.

Who are the founders of Near Protocol?

NEAR Protocol was co-founded by Erik Trautman, Alex Skidanov, and Illia Polosukhin. The Near mainnet went live in April 2020, with the NEAR token launching five months later.

Trautman identifies himself as an entrepreneur who founded several high-tech companies before co-founding Near Protocol with Skidanov and Polosukhin. He served as the protocol’s operations director and CEO.

Skidanov began his career at Microsoft before joining memSQL in 2011, where he served as an architect and engineering director. Skidanov won a bronze medal in the International Collegiate Programming Contest in 2005 and a gold medal in 2008.

Polosukhin joined Near after nearly nine years in big data predictive analytics and artificial intelligence, with the last three years at Google managing a team of deep learning and natural language understanding researchers.

In February 2022, Near launched Pagoda, described as the world’s first Web3 entrepreneurial platform, providing an end-to-end solution for developer entrepreneurs. Pagoda builds upon the company’s work in creating and building Near. The new platform offers a fully Web3-native toolkit, as described by Near, for building, maintaining, and scaling blockchain-based startup projects.

The Pagoda team currently consists of over 70 members from 20 countries. Pagoda continues to contribute to the NEAR ecosystem by building, maintaining, and expanding protocols, SDKs, and APIs, while releasing more tools and services for developers and users.

NEAR Token

NEAR Protocol (NEAR) is the native token of the NEAR ecosystem. It is an ERC-20 token with a maximum supply of 1 billion tokens. NEAR tokens can be

used to pay transaction fees and data storage fees on the network. Additionally, smart contract developers can receive a portion of the transaction fees generated by their contracts. To ensure the scarcity of NEAR tokens, the remaining transaction fees are burned.

Token holders can use the NEAR wallet to earn rewards by staking tokens. After staking tokens, they can run a validating node to earn rewards. The reward pool amounts to 4.5% of the total supply of NEAR tokens. Token holders can also participate in the governance of the NEAR network by submitting and voting on proposals related to the platform and products.

How to buy NEAR tokens?

You can buy NEAR tokens on cryptocurrency exchanges, such as Binance.

1. Log in to your personal Binance account and click on “Trade.” Choose either the “Standard” or “Advanced” trading interface.
2. Click on “BTC/USDT” and open the search bar. Enter “NEAR” to view available trading pairs. In this example, we choose NEAR/BUSD.
3. In the “Spot” area on the right, enter the amount of NEAR you want to buy. You can place orders with different order types. Choose an order type, such as a market order, and then click “Buy NEAR.” These NEAR tokens will be deposited into your spot wallet.

Conclusion

NEAR Protocol, as an emerging blockchain platform, has many outstanding advantages and potentials. Its high performance, low cost, and diverse ecosystem make NEAR Protocol a highly anticipated blockchain project. With the continuous development and improvement of the ecosystem, NEAR Protocol is expected to become one of the widely used blockchain platforms in the future.