This is the most comprehensive NEAR Protocol Review on the internet. This article contains everything you need to know about this potential Ethereum killer.
Mass adoption of the blockchain technology and the various decentralized applications built with is only possible when these dApps are easy to build, use, and maintain even when they scale to millions of users.
The race for mass adoption cannot be realized when blockchain-based applications cannot even match the minimum speed and user-friendliness of traditional financial systems.
While several attempts and progress has been made to make decentralized blockchain applications available and easily accessible to the masses, we are still far away from coming close to gaining the same amount of user adoption that traditional financial systems enjoy.
Ethereum and its much anticipated ETH 2.0 is supposed to take us to the promised land of scalable, useable, and high speed decentralized applications but it has been quite slow, expensive, and relatively difficult to use and incapable of attracting or supporting large scale adoption.
The NEAR protocol claims to hold the answer to the blockchain problem of scalability, usability, and mass adoption.
Having been in development for about two years, the NEAR Team claims that its smart contracts blockchain and platform for decentralized applications are more user-friendly, less expensive, more scalable compared to big brother Ethereum.
Even Vitalik Buterin, the Ethereum founder, was quoted to have made statements suggesting that NEAR may represent a significant challenge to Ethereum at some point.
What is NEAR?
Near is an open-source, programmable blockchain (smart contracts) and distributed computing platform based on the Proof of Stake (PoS) algorithm that enables developers and practically anybody to build and deploy decentralized applications (dApps) easily.
The NEAR Protocol is a sharded, Proof-of-Stake (PoS) blockchain that operates in a similar design to the forthcoming Ethereum 2.0 and the existing Cosmos network.
NEAR is the newest blockchain project for running decentralized applications (dApps) that claims to be secure enough and capable of powering the mass adoption of blockchain applications built for cryptocurrencies, identity systems, games and practically anything developers can think of building on the network.
According to the project’s website, even a non-blockchain developer should be able to build, deploy and manage dApps on the network, onboard, and provide users with a smooth and seamless experience –whether they’re familiar with crypto or not.
The NEAR project is built using a novel consensus mechanism called “Nightshade” and uses sharding technology to scale infinitely (at least in theory) – and thus making mass use of wildly successful dApps possible.
As a public blockchain network, NEAR Protocol maintains an open-source codebase that any interested developers can contribute to. Thus anyone can easily and quickly access, read, or write to the blockchain to get whatever result they want.
Canaan Linder, founder, and CEO of Stardust, a project built on NEAR which allows game developers to quickly add revenue-generating economies for their apps proudly states about NEAR:
“NEAR’s technology allows Stardust to scale to millions of users without having to worry about infrastructure limitations or costs. Without NEAR, Stardust’s business model could not work”.
The NEAR Team
The NEAR Project was founded by Alex Skidanov and Illia Polosukhin.
Alex started his professional career at Microsoft in 2009, and then joined MemSQL in 2011 where he worked for 5 years as Architect and Director of Engineering.
Illia (CEO, Near Inc) has over 10 years of experience as a senior developer, including three years at Google where he was a major Tensor-Flow contributor and a manager of the team building question-answering capabilities for the core Google search.
The NEAR Protocol core contributors include several ex-MemSQL engineers responsible for building sharding, cross-shard transactions, and distributed JOINs and an award-winning team of former Google, Facebook, MemSQL, and Niantic engineers who are reputed to have developed and implemented some of the only real-world sharded systems being used at scale.
What’s more, the project is backed by over 40 investment firms including Pantera Capital, Libertus, Blockchange, Animal Ventures, Distributed Global, Notation Capital, among others, and led by venture capital firm Andreessen Horowitz (a16z).
How Does NEAR Work?
The NEAR Protocol uses a technique called “sharding” that splits the network into multiple pieces – shards – to enable parallel processing of transactions. Meaning there isn’t a theoretical limit on the network’s capacity.
By processing in parallel we mean that transactions are batched and executed on different shards simultaneously.
Each shard is technically a separate blockchain that maintains its own resources and set of validators (participants that verify transactions and produce blocks, either by mining, such as in Proof of Work or via a voting-based mechanism) but can interact with and communicate with the main chain and other shards.
In specifics, here’s how the NEAR Protocol works:
- Scalability with Sharding
- Validators Network
- Token Economics
Sharding & Scalability
First-generation blockchains such as Bitcoin, Ethereum, and the rest are extremely slow compared to traditional payment systems mainly because every single transaction is processed by all the validating nodes or miners on the network.
This is highly inefficient and wasteful in practice, and soon enough, as the number of transactions and activities on the blockchain increases the network begins to get clogged and transaction processing ultimately grinds to a halt.
This has already happened to Ethereum in 2017, when one of its dApps –Cryptokitties – became so popular that it clogged the network, slowing all transaction processing almost to a halt. The App only had 14,000 users as at then –evidence that Ethereum is not suitable for large scale applications or mass adoption (at least for now).
NEAR uses a sharding design called “Nightshade” to scale its performance. Sharding allows the work of validating or processing transactions to be broken up amongst many ‘shards’, each of which is validated by different nodes.
Accordingly, the work of validating transactions can be scaled with the number of shards, thus making it easier for the network to handle large transaction throughput.
Sharding technology is regarded to be a difficult engineering problem that has rarely been successfully implemented.
However, the NEAR team has previously built one of the only sharding based system in production which is being used at scale today by Uber, Goldman Sachs, and Comcast.
Consensus & Validation
The NEAR protocol uses the Proof-of-Stake mechanism to ensure that transactions are validated correctly and that it is difficult and expensive for an adversary to attack the network and validate false information.
Because, validators are required to stake a predefined number of the network’s tokens in order to be able to produce and verify blocks, and in return, they earn block rewards that come from token supply inflation, transaction fees, and storage fees.
There are three types of validator nodes contributing to secure the NEAR network:
- Chunk producers. These collect transactions for a shard, produce and communicate shard blocks, called chunks.
- Block producers. These produce a single block containing all current chunks.
- These watch and verify that state transitions in different blocks are accurate.
NEAR Tokenomics (Token Economics)
NEAR has its own native called NEAR, which is used by the system to pay the validators who provide the scarce compute and storage resources that power the network.
Transaction fees are priced based on their complexity and storage fees are priced based on the amount and of space used and for how long.
The system compensates validators using a static inflation rate which is offset by burning the tokens received for transaction and storage fees.
Both of these fees are set in a unit called “gas” which is priced in NEAR tokens by using a simple market-driven process that gets smoothed out by the system’s ability to dynamically add or remove capacity via resharding.
Check out the project’s Economics Paper for details of NEAR’s economics.
What Makes NEAR Unique — Why Should I Build on NEAR?
NEAR is ahead of other smart contracts blockchains in two broad ways:
- Better Blockchain Dev Tools: Build on NEAR with the tools and speed comparably to what’s obtainable in traditional Web2 systems.
- Simplified Blockchain UX: NEAR takes the complexity associated with “blockchain” out of the design and products built on its platform. With NEAR your users wouldn’t notice that they’re actually using a blockchain –easy, fast, and less costly.
Other reasons why building on NEAR might be the perfect choice for you are:
- Well-Supported OSS Stack
You can write blockchain smart contracts using any language that compiles to WebAssembly (WASM) such as TypeScript, and Rust.
- Online IDE + Fast Deployment
Develop and deploy your first dApp on the NEAR blockchain in seconds even if you’re a non-blockchain developer by using the NEAR online Integrated Development Environment (IDE).
- Protocol-Level Royalties
Earn a percentage of the transaction fees generated by your smart contract on NEAR. This opens up a whole range of automated royalty and licensing-based business models that were previously nearly impossible to implement as smart contracts on a blockchain.
- Easy Onboarding
Let your users try your decentralized app the same way they try all other apps – for free.
- Progressive Security
Allow your users to sign up with just an email address and password or NEAR’s SSO… no keys and no browser extensions required until the user is ready to upgrade the security of their account at which point you can securely and atomically transfer their account to them.
- Protocol-Level Permissions
Let your users use your app without ever knowing they’re committing to a blockchain. Users can give apps permission to sign blockchain transactions on their behalf and can revoke those permissions at any time.
Summary of NEAR Protocol Review
NEAR is a highly scalable blockchain project for running decentralized applications (dApps) that aims to support the mainstream adoption of blockchain-based applications.
The project’s core team comprises some of the finest and experienced engineers, entrepreneurs, and technologists in the world who have developed similar systems in the past.
NEAR is already in the market with a working product based on Blockchain sharding which is similar to what Ethereum 2.0 is working on. A step ahead of big brother Ethereum seems to be a bragging right.
What’s more, the project has already secured a sufficient amount of capital from big-name backers who are committed to seeing NEAR realize its dream of an infinitely scalable, faster, and user-friendly blockchain dApps platform.
What do you think about the NEAR Protocol and smart contracts blockchain? Is it a perfect challenger to Ethereum 2.0? Share your thoughts in the comments section below.