What is Near Protocol (NEAR): Understanding its features and applications

What is Near Protocol (NEAR): Understanding its features and applications

Another trend rocking the blockchain industry in recent years is smart contract-capable blockchains. These unique types of blockchains aren’t new and have been around since 2015, starting with the development of the Ethereum Mainnet. They are the driving forces behind the Defi industry and the development of dApps on smart contract platforms.

However, despite the rapidly growing demand for decentralized applications and the creation of D-apps that are getting more sophisticated and powerful, adoption is still hindered by many significant fundamental barriers such as scalability and interoperability.

That’s the problem Near protocol aims to solve. The protocol is a newcomer designed with community-governed, sharded blockchain technology to overcome the flaws of existing systems.

This article will cover everything you need to know about Near Protocol, including what is near blockchain, how it works, its features, application, tokenomics, and more. There’s also a comparison between Near Protocol and similar protocols at the end.

What is Near Protocol?

If you’re familiar with blockchain technology, you know the Ethereum network. NEAR protocol is a proof-of-stake (PoS) blockchain — considered a top competitor of the Ethereum blockchain — that supports smart contracts and facilitates the development and deployment of dApps. 

This protocol’s standout feature is its scalability which it achieves using sharding technology. Another unique feature of this platform is its focus on developers’ and users’ usability, which is why it’s a crowd’s favorite among other smart contract-capable blockchain networks. 

NEAR is the native cryptocurrency on the Near crypto platform. Users can use the coin for transaction and storage fees. Staking the NEAR token can also provide owners with advance network consensus rights and make them transaction validators. 

We can’t discuss Near Protocol comprehensively without mentioning the brain and institutions backing the network. So, who founded Near Protocol?

Near Protocol founder

Former MemSQL’s director of engineering, Alex Skidanov, and Illia Polosukhin (A former Google employee who contributed to creating the company’s search engine services and artificial intelligence capabilities) are the creators of NEAR Protocol. 

Near protocol backers, including leading venture capital firms like Andreessen Horowitz and Pantera Capital, have also contributed more than $20 million to NEAR over several rounds, aiding the network’s development. Early-stage investors have purchased about 35% — amounting to 1 billion NEAR tokens — in its ICO.

How does Near Protocol work?

While the number of dApps across different industries, from financial services to games, has exploded in the cryptocurrency industry, it’s also clear that scaling is still an issue for most blockchains.

Scalability is a problem that affects many blockchains, particularly more established ones like Ethereum and Bitcoin. Blockchains’ inability to handle massive quantities of transactions at affordable costs and quick speeds is the fundamental cause of the problems.

This problem is what Near aims to solve by creating a brand-new blockchain with a different architecture. Sharding technology was the Near team’s implementation of a solution to the issue. 

The sharding approach allows Near to divide the blockchain into smaller, easier-to-manage chunks. Lowering the computing effort lightens the pressure on the network and boosts transaction throughput.

DApps can also be created on Near, just like Ethereum. Near’s cloud architecture, which mixes serverless computing and decentralized data storage, enables this. In addition, Near Network operates from numerous servers spread across the globe.

How fast is Near Protocol?

The Near protocol is undoubtedly one of the faster networks in the blockchain industry. Near protocol transactions per second measure up to 100,000 and instantly reach transaction finality — due to a 1-second block cadence. 

NEAR claims that thanks to its technology, it can get transaction fees that are 10,000 times less expensive than Ethereum.

What language is Near Protocol?

Rust and AssemblyScript are the two primary programming languages used by Near Protocol.

Near Protocol technology 

Near protocol uses sharding technology to address Ethereum and other layer-2 solutions’ scalability issues. 

Before delving into what this entails, it’s helpful to know that blockchain nodes serve three primary purposes: process transactions, send validated transactions and finished blocks to other nodes, and preserve the current state and network history. These jobs put increasing strain on the nodes due to network congestion.

NEAR’s solution, sharding, reduces the computational load (or fragments) by slicing or dividing the network into shards. This strategy allows shards to do the computation in parallel because near protocol nodes only need to run the code pertinent to its shard. As a result, the network’s capacity scales as the number of nodes grows.

NEAR also employs a PoS mechanism to achieve consensus among the network’s nodes. To be eligible to participate in PoS, nodes who want to act as transaction validators must stake NEAR tokens. 

Owners of tokens who do not wish to run a node may assign their stake to any validator of their choosing. Every epoch (about every 12 hours), validators are selected by NEAR via an auction system. Validators with more stakes have a more significant impact on the consensus procedure.

While some validators are tasked with constructing blocks that contain chunks from all the shards, others are charged with validating “chunks,” an accumulation of transactions from a shard. Other nodes, referred to as “fishermen,” keep an eye on the network and look for and report hostile activity.

Features of Near Protocol

Some of the unique features that separate Near Protocol from the rest includes:

1. Sharding

Any blockchain’s nodes typically perform three basic tasks: processing transactions, sharing finished blocks and valid transactions with one another, and preserving the network’s transaction history. These tasks get trickier for nodes to handle as a network expands and attracts more people.

Near employs a sharding strategy that increases the network’s capacity even when new nodes are added. Network nodes divide into numerous shards dynamically due to high network utilization. Then, computing is distributed across these shards in parallel, lessening each node’s computational load.

With sharding, nodes are only required to run the code pertinent to their shards and not the entire network’s code, as is the case with Bitcoin nodes.

2. Decentralization 

For a network to be decentralized, it has to be permissionless. Also, the prospective node operators must be free to join in sustaining real decentralization.

The staking method used by Near, known as threshold proof-of-stake, is considered fair and predictable. This strategy discourages the pooling of powerful validators and promotes widespread engagement among network participants.

3. Usability-centric Network

The Near Protocol prioritizes usability with a “progressive security” concept that enables developers to design a user experience matching online experiences. Near is aware of the importance of usability first and foremost because it is likely that developers will only produce apps that are valuable and usable for their users. 

As part of its mission to be user-centric, Near provides consumers with straightforward onboarding, subscriptions that are simple to manage, predictable pricing, and familiar usage patterns.

4. Governance

The administration of the Near Protocol also permits rapid protocol improvement while maintaining the supply of beneficial feedback and oversight towards the community to guarantee the independence of the protocol.

One of Near’s goals is to preserve community-led creativity through effective execution, sound judgment, and proper network representation.

Which tools does NEAR provide to developers?

NEAR developed a collection of tools and reference implementations under an open-source model to make it simple for developers to create and deploy smart contracts and apps. Some of these tools include:

  • NEAR SDKs: This tool from Near provides programmers with standardized data structures, examples, and testing tools for JavaScript and Assembly to assist them in writing smart contracts. 
  • NEAR Gitpod: The Integrated Development Environment (IDE) of Gitpod was customized by NEAR to enable developers to create, test, and deploy smart contracts from a web browser.
  • NEAR Examples: This website offers templates that programmers can utilize to create NEAR applications more quickly.
  • The NEAR team also offers command-line tools so programmers can construct, test, and deploy apps from their local environments.

What opportunities does NEAR offer to Developers?

Another reason developers prefer NEAR to other blockchain solutions is the enticing opportunities the platform provides for developers to gain new skills, gain access to finance and receive fair compensation for their work. Some such opportunities include:

  • NEAR Academy: The Near Academy program aims to teach web developers how to incorporate blockchain technologies into their apps through free interactive courses. The participants receive a certificate of completion at the end of the course. The Near protocol tutorial is a fantastic tool for onboarding new developers and facilitating developers’ transition from Web2 to Web3.
  • NEAR Certified Developer Curriculum: NEAR runs a program for developers to learn how to design, build, and deploy smart contracts appropriate for experienced and entry-level developers. Developers get rewarded for the time they invest in learning new skills in addition to receiving a degree.
  • NEAR has open funding possibilities for OSS, tools, APIS, contracts, and more, totaling $1 million in grants.
  • Developers receive 30% of the fees from smart contracts: On NEAR, developers are well compensated for their efforts and receive 30% of the payments from the deployed smart contracts.

Applications and uses of Near Protocol

Several well-known NEAR Protocol application cases exist; however, the most popular ones include:

  • Decentralized Finance: DeFi is now available on the NEAR Protocol and opens to users and developers all across the world with the release of Rainbow Bridge. All Ethereum-based assets are currently fully operational and useable in NEAR Protocol-based dApps.
  • Non-Fungible Tokens: The most prominent characteristic of NFTs are special digital certificates registered on a digital ledger (blockchain). It maintains a permanent record of who owns every asset, digital or otherwise — making digital asset ownership of NFTs possible. NFTs work better on the NEAR Protocol since it is much faster than generation 2 blockchains.
  • Decentralized Autonomous Organization: A decentralized autonomous organization, or DAO, is not controlled by a CEO or a board of directors but rather by a defined community. Every DAO member can participate in platform governance and make significant decisions through voting to create long-term business strategies for their particular organization. Using DAO, Near Protocol eliminates bureaucracy within their company. It gives token holders access to more sophisticated accounts that allow them to store tokens, NFTs, and other assets on the platform.

Why use the Near Protocol?

We recommend Near Protocol for many reasons. One is its sharding technique which enables more transaction volume and security than other platforms. Also, programmers who want to create more effective applications that can process a lot of activities would find Near protocol an ideal choice. 

NEAR provides the user with a layer-1 solution that is interoperable with other blockchains like Ethereum, making it easy for Ethereum developers who wish to connect their applications to NEAR.

Investors interested in the potential of sharding as a way to scale blockchain technology and who want to be part of the future growth of NEAR’s ecosystem can add the token to their portfolio.

What is the NEAR token?

The main native asset of the NEAR ecosystem is the NEAR token, and all accounts can use it. Similar to Ether, each token is a unique digital asset that users may use to:

  • Pay the mechanism for handling transactions and storing data.
  • Run a validating node as a network component to participate in the staking process.

By taking part in governance processes, you can impact the allocation of network resources and the future technological course of the network. The NEAR token enables both unique behaviors among apps built on the network and the economic coordination of all network participants.

Near Protocol token economics

Near tokenomics and supply distribution.

The NEAR token is mainly employed to cover transaction costs and security for data storage on blockchains. NEAR also rewards several blockchain stakeholders with NEAR tokens. Every epoch, transaction validators are rewarded with NEAR tokens equal to 4.5 percent of the yearly NEAR supply as compensation for their work.

In addition, smart contract creators get a share of the transaction fees that their contracts produce. The remaining portion of each transaction fee is burned, making the NEAR token more scarce. To reinvest in the ecosystem’s growth, NEAR has also established a protocol treasury, which receives 0.5 percent of the total NEAR supply annually.

NEAR Protocol can support “wrapped” tokens from other chains and NFTs. Similarly, NEAR and Ethereum have built a bridge that enables users to send ERC-20 tokens from Ethereum to NEAR.

How to buy NEAR?

You can buy the NEAR token on a few crypto trading sites, such as Crypto.com and Binance. Binance only supports NEAR on its website Binance.com, which is not accessible to US users. If you’re based in America, a great alternative crypto platform to purchase NEAR from would be Crypto.com.

Note that you must set up a wallet to store and transfer your NEAR tokens if you intend to use them on network-based DApps. 

Of course, you can use the Near native wallet or some third-party crypto wallets. We’ve compiled a list of top wallets that supports the NEAR token below.

Which Wallets support NEAR?

Near has its native wallet, which is available to all users. Other supported wallets work with the Near Protocol network, which includes:

  • Ledger
  • Coin98 Wallet
  • Liquidity
  • Math Wallet
  • Guarda
  • Trust Wallet
  • Portis Wallet
  • Narwallets

Also read: Top Near protocol wallets to use in 2022, 2025, and 2030.

How to store NEAR Protocol Coin

Users can store the NEAR tokens in a wallet — a digital wallet —  just like we keep cash or credit cards in a physical wallet. Your choice of digital wallets can be web-based or hardware-based — both have pros and cons. 

For additional security, you can also store the wallet on a mobile device, a desktop computer, or kept secure by printing the private keys and access addresses on paper.

Staking NEAR tokens

Near protocol staking process is straightforward. You’ll find the “Staking” tab on the NEAR Wallet home page. Once you click on it, you must decide how much NEAR you want to stake and which validator you want to assign the tokens to. You can select your validator from the list, and after clicking “Select,” the validator’s charge will be displayed. 

After choosing your validator, click “Stake using validator” and enter the number of tokens you wish to stake. Alternatively, select “Use Max” to stake all the tokens in your wallet. Click “Submit stake” to complete.

What is the staking return?

NEAR’s stake return is 11.28% at the time of this writing. Note that this value may change in the future. For the latest updated information on NEAR’s staking returns, visit https://near-staking.com/.

NEAR Comparison 

NEAR vs. Polkadot

Polkadot and NEAR are both Layer 1 blockchains, although they differ significantly in architecture. 

NEAR Protocol serves as a foundation for decentralized application development. On the other hand, a relay chain that connects all of the blockchains in the Polkadot network, sometimes known as “parachains,” offers security and interoperability between the chains. 

The relationship between Polkadot and NEAR is represented by the design trade-off between creating a World of Dapp’s Protocol and a Universe of Chains Protocol. 

Octopus Network vs. NEAR

As discussed earlier, NEAR Protocol is a foundation for decentralized application development. Octopus Network leverages on top of Near’s platform. It was created as a platform for hosting app chains or blockchains explicitly tailored for a given application. Developers have the freedom to develop their dApp hosted on their blockchain, thanks to app chains. 

To benefit from NEAR’s security, save costs for app chain developers, and take advantage of NEAR’s compatibility with Ethereum, Octopus Network leverages NEAR Protocol as a mother chain to build its relay as smart contracts.

Frequently Asked Questions About Near Protocol 

Is Near Protocol a blockchain?

Near protocol is a layer one blockchain network. It provides a platform for developers to build decentralized applications (dApps). 

Is Near Protocol based on Ethereum?

No. Unlike other layer-2 solutions based on the Ethereum network, Near Protocol was developed with a different architecture. 

Who are the founders of Near Protocol?

Near protocol was founded by Alex Skidanov and Illia Polosukhin.

How many users does Near Protocol have?

In a recent tweet released by Near Protocol, it claims to be heading towards registering a total of 1 billion users. Also, the network’s data show over 13 million wallets created on the protocol. 

What are the projects based on Near?

NEAR Protocol has garnered much interest from the cryptocurrency sector in its more than two years of existence. The NEAR ecosystem has snowballed during this period, and many new and intriguing initiatives have joined it.

Where is near crypto located?

Near protocol was founded in 2017 and is based in Zug, Switzerland.

How does Near Protocol make money?

Near protocol makes money through the network usage fees it charges users. The network’s utility is its ability to store application data and give users a method to modify it by sending out transactions. NEAR charges transaction fees for processing the modifications to this stored data.

Is the near protocol a good investment?

Near protocol is one of the fast-growing cryptocurrencies this year. Its native token, NEAR, was also one of the best-performing cryptocurrencies in 2021. We believe the project will be a wise investment in 2022 based on the NEAR Protocol’s recorded successes over the previous few months.

NEAR 1Y price chart
NEAR 1Y price chart

However, before investing, we suggest that you research the project. When you buy or sell carefully, take a calculated risk, and do your research, there shouldn’t be any heartbreaks or inflated expectations. In Near Protocol price prediction article, we dug Dipper on the future price of the toke.

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