What is NEAR Protocol?

[TL;DR]

---

Founded by the NEAR Foundation based in Switzerland and under development for an undisclosed amount of time prior to launch, the NEAR mainnet blockchain went live in April 2020.


Argued as the future of smart contracts, DeFi and dApps by many, NEAR Protocol is a Layer-1 blockchain that utilizes unique features of network security, governance and scalability to create a foolproof platform that seeks to make the ecosystem easy to use and easy to develop.

This article gives a walkthrough of what NEAR Protocol is, how it works and the unique features that make this project such an interesting one for the future of the digital asset class.

What is NEAR Protocol?

---

NEAR is a decentralized network that runs on the NEAR Protocol blockchain, being therefore a Layer-1 crypto project. It utilizes the proof-of-stake mechanism known as Thresholded Proof-of-Stake (PoS), or TPoS. Much like Ethereum, Solana, Cardano and other Layer-1 projects, the NEAR blockchain was created to accommodate decentralized applications, known as dApps.

Founded by the NEAR Foundation based in Switzerland and under development for an undisclosed amount of time prior to launch, the NEAR mainnet blockchain went live in April 2020.

Unlike other blockchain networks which support smart contract applications through PoS, the TPoS framework utilizes a predefined consensus across all applications in the network, therefore increasing security in its decentralized ecosystem while ensuring a fair mechanism of rewards distribution.

For that reason, the platform seeks to become more efficient than the Ethereum network through better scalability, ease of development and ease of utilization.
Beyond its software, NEAR Protocol includes innovative resources such as legible usernames for its users which replace the usual cryptographic address of digital wallets. The protocol also allows users to interact with dApps and smart contracts without the need of having their own wallets connected.

An ambitious project, developers seek to turn NEAR Protocol into the most accessible blockchain in the world for developers and day-to-day users.

How does NEAR Protocol work?

---

In order to understand how NEAR Protocol works, it’s necessary to keep in mind that Layer-1 blockchains always face great challenges of scalability. Ethereum, for instance, is probably the best example available. In this context, scalability refers to the blockchain’s ability to process many transactions while delivering fair fees and speeds for such processing.

While Layer-1 blockchains like Ethereum were overstressed due to high network demand, becoming nearly intolerable for most dApps that tried to scale in the network, developers started defending that scalability solutions were created.

While Ethereum has been trying to comply with such requests through its 2.0 update, other projects like NEAR Protocol established separate networks with fundamentally different infrastructures to resolve the issue. NEAR proposed a sharding mechanism, which partitions the database of the blockchain network to solve scalability.

More precisely, sharding is employed to reduce the computational overload of the network, allowing nodes to run the blockchain with little effort. By splitting the operations into shards, fragments of nodes, it becomes much easier for each node to operate into specifically attributed fragments. In other words, each node doesn’t need to run the network’s entire code to verify transactions, only what is relevant to the distributed shards.

What is the NEAR token?

---

As expected from a Layer-1 project, NEAR Protocol uses a native crypto - the NEAR token - for its transactions. NEAR is also utilized as collateral to safeguard data in the blockchain, governance tasks, stake in liquidity pools or yield farms. The token is also used to compensate validators and developers that are implementing smart contracts in the blockchain.

At the time of writing, NEAR had a circulating supply of 618 million tokens with a maximum supply of 1 billion, meaning that 39% of all tokens had yet to be released through previously mentioned motivators.

NEAR Protocol Governance

---

NEAR has an interestingly unique governance setup, since its resource distribution is not controlled by the Decentralized Autonomous Organization (DAO) of the platform like it usually happens with Layer-1 projects. Instead, the NEAR Foundation takes charge of that obligation.

The Foundation is a non-profit founded in Switzerland which controls the protocol’s maintenance and governance tasks. Unlike most projects, where the nodes vote on different maintenances and updates, the foundation’s council is responsible for managing and overseeing the operation.

Currently, the NEAR Foundation is making efforts to establish a standard of governance and network implementation for infrastructure developers related to Web 3.0 projects. It seeks to offer exclusive resources that are, like its previous features, easy to develop and easy to use.


Author: Gate.io Researcher: Victor Bastos
* This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.