What is Near Protocol (NEAR)? A layer 1 blockchain as efficient as layer 2 | | gate

What is Nearprotocol (NEAR)?

With the continuous rise of people's interest in dApp, many blockchain protocols also face scalability issues. Some protocols take detours, trying to cover up this problem instead of seeking appropriate solutions. NEARprotocol, as a DecentralizationOpen Source platform, aims to accelerate the development of dApps.

NEAR protocol focuses on providing a developer and user-friendly environment to solve usability and scalability issues, and aims to provide a reference for creating high-performance dApps.

NEARprotocol was co-founded by Erik Trautman, Alexander Skidanov, and Illia Polosukhin. The project began to take shape between 2017 and 2018, when Polosukhin and Skidanov began exploring the field of machine learning and automated programs, and were committed to developing a dApp platform that could be easily and simply built for developers to use on a large scale. Eventually, they launched the Nearprotocol network in April 2020, which has been operated by the community since September 2020.

Like Ethereum Virtual Machine (EVM), NEAR is mainly used to host dApps. Unlike encryptionWalletAddress, one of NEAR's main features is the use of more readable account names, rather than a meaningless string like encryptionWalletAddress. In addition, new users can use Smart Contracts without a Wallet. These features are extremely attractive to developers and users, allowing them to participate in building one of the most useful and scalable Smart Contract platforms ever, and enabling easy access to the platform across the entire network. The NEAR protocol development team has repeatedly stated that they hope to solve scalability issues by building a particularly efficient data processing mechanism that will guarantee a very high number of transactions processed per second.

One of the most effective layer 1 protocols in the blockchain ecosystem

Layer 1 network (Layer 1) refers to the underlying blockchain. Binance Smart Chain (BNB), Ethereum (ETH), Bitcoin (BTC), and Solana are all part of the Layer 1 network protocol. They are called Layer 1 networks because they are the main networks in their respective ecosystems. When the demand for Layer 1 network increases and scalability becomes an issue, gas fees and Transaction Cost will also pump accordingly. To solve this problem, we have to rely on the so-called 'Layer 2 network (layer 2)'. Layer 2 is essentially a secondary framework where blockchain transactions and processes can be conducted independently of the first layer (mainchain).

NEARprotocol aims to solve scalability problems directly through its original protocol, without having to rely on an "external" Layer 2 network. In order to ensure the security, communication and dissemination of information, the NEAR network has implemented a new random method, which can ensure the unpredictability and impartiality of the network when more than 2/3 of the nodes do evil.

What is the operation principle of NEARprotocol? Nightshade and Sharding

While other blockchains have already adopted layer 2-based solutions to try to solve the scalability problem, Near has decided to build a brand new blockchain with a different architecture.

NEARprotocol's core technology is Sharding, called Nightshade. Nightshade disperses the work of processing transactions to numerous validating Nodes, with each Node only needing to handle a small portion of network transactions. This allows Nodes to process and verify transactions in parallel across multiple Sharding, increasing Transactions Per Second and overall network scalability. Participating Nodes are only responsible for maintaining a small portion of Blocks on-chain, which disperses the responsibility of maintaining network security and can enhance the overall security of the network.

In order to achieve Consensus among various Nodes on the network, NEAR uses the Threshold Proof of Stake (TPoS) as an electoral mechanism to select validators. TPoS is similar to an auction, where an account intending to stake can submit a transaction indicating the quantity of Token to be staked in order to qualify for participation. Subsequently, validators are selected in each round (approximately every 12 hours), and the more stakeTokens one has, the greater influence they will have in the Consensus process and the higher the likelihood of being selected as validators.

Features of NEAR protocol: Rainbow Bridge and Aurora

One important feature of NEAR protocol is undoubtedly the Rainbow Bridge. The Rainbow Bridge allows participants to easily transfer any ETH-based token between the Ethereum network and NEAR. When a token is transferred from one chain to another, the native token is destroyed by a smart contract and then transmitted to the receiving chain in the form of a new token. The reverse operation works the same way, burning the token on the receiving chain and transferring it back to the sending chain. The launch of the Rainbow Bridge is significant because developers can enjoy faster transfer speeds and lower fees than Ethereum.

The second-layer solution Aurora of NEAR Protocol makes it possible for NEAR to be compatible with the Ethereum ecosystem. Aurora aims to help developers launch their Ethereum dApps on the NEAR network. In simple terms, Aurora is equivalent to the Ethereum Virtual Machine (EVM) of NEAR Protocol, as it is built using Ethereum's coding techniques. Developers can easily get started on the NEAR chain without rewriting dApps or learning new development tools. Aurora is able to confirm transactions within 2 seconds, which means that the transaction fees for Decentralized Finance applications based on NEAR Protocol are hundreds of times cheaper than those based on Ethereum and other networks. The computation fees for Smart Contracts must be paid in NEAR tokens as gas fees.

NEAR DA

The core of NEAR DA lies in Nightshade Sharding technology, which divides the network into multiple Sharding, each responsible for generating a small part of the Block, known as a 'chunk'. These chunks are then aggregated to form a complete Block, a process that is transparent to users and developers, significantly improving efficiency. NEAR's design philosophy is to ensure that the network does not dropConsensus speed due to excessive data, while also ensuring that users have enough time to query transaction data. This is particularly important for high volume Rollup solutions, not only for gaming networks, but also for other fields such as artificial intelligence/machine learning that require scalable data storage.

As NEAR protocol transitions to stateless validation, it will further drop hardware requirements, support more Sharding, and enhance the level of Decentralization in the system. Currently, NEAR protocol is already very efficient, with each individual Sharding processing 4MB of data per second. There are currently 4 Shards, and in the future, by expanding to n Shards, the Rollup solution based on NEAR and other projects will no longer need to compete for Block space, which is in sharp contrast to the scalability limitations of single-chain systems and other Blockchains.

The cost-effectiveness of NEAR DA is also very apparent. Taking Arbitrum as an example, the 10-week data storage cost using NEAR DA is only $87.62, while the traditional solution requires over $16 million. In comparison, Celestia's data storage costs are also much higher than NEAR DA.

In summary, NEAR protocol provides a cost-effective and scalable data availability solution, which is based on a future-oriented technical architecture and is constantly expanding its scope of application through integration with Rollup development toolkits/stacks (such as Polygon CDK, Arbitrum Orbit Stack, AltLayer, and other Rollup-as-a-Service (RaaS) providers).

NEAR Chain Signatures

NEAR Protocol has launched the Chain Signatures feature, allowing NEAR accounts to sign transactions on different blocks on-chain, achieving true Cross-Chain Interaction interoperability, enabling a single NEAR account to control and manage multi-chain assets, accounts, and data.

How it works

By determining the derivation paths, NEAR accounts can derive unique addresses on the target on-chain. The multi-chain smart contracts deployed on NEAR are responsible for requesting signatures from multi-party computation (MPC) services. The MPC service splits the signature into multiple parts and distributes them to multiple nodes to ensure that the private key is not obtained by a single node. Finally, the NEAR account merges the signature parts to construct a valid Cross-Chain Interaction transaction.

This mechanism not only improves security, but also greatly simplifies the user experience. NEAR accounts can use a single Private Key to manage assets across multiple chains, without the need to create multiple Wallets. NEAR also provides a multi-chain gas relay contract, allowing users to use NEAR Token to pay gas fees on other chains, further enhancing the convenience of Cross-Chain Interaction transactions. This innovation is expected to drive further development in the fields of Decentralized Finance and asset management, bringing a better experience for users and developers.

NEAR Protocol Burrow v2

NEAR Protocol has launched the Burrow v2 upgrade, which aims to enhance the performance and user experience of its Decentralized Finance (DeFi) platform. The new model allocates rewards based on users' net Liquidity (the difference between deposited assets and borrowed assets), aiming to more efficiently utilize Burrow's treasury and align rewards with actual usage. Here is the main feature list of the NEAR Burrow v2 upgrade:

1. Net Liquidity Mining model:

• Replaced the previous total deposit Mining mode.
• Rewards are allocated based on the user's net Liquidity (deposited assets minus borrowed assets).

2. Enhanced price Oracle Machine functionality:

• Use AllowlistOracle Machine inspired by MakerDAO.
• Managed by multiple independent operators to ensure the accuracy and timeliness of price reporting.

3. Improved Fund Efficiency:

• More efficiently utilize Burrow's funding pool and optimize fund usage.

4. Transparent and predictable revenue model:

• Provide users with a more transparent way to calculate profits, drop uncertainties.

These improvements not only enhance overall capital efficiency, but also provide users with a more transparent and predictable income model, further consolidating Burrow's position in the NEAR ecosystem. With these upgrades, Burrow v2 is expected to attract more users and assets to the platform, promoting the continued development of the NEAR Protocol.

What is the NEAR token?

NEAR is the native Token of NEAR protocol, an ERC-20 Token with a Maximum Supply of 1 billion. NEAR is mainly used to pay transaction fees, as Collateral for storing data on the NEAR chain, and as a reward for stakers and validators for their efforts in securing the blockchain and participating in governance. A portion of the transaction fees generated by Smart Contracts is allocated to developers, while the rest is burned. This mechanism increases the scarcity of NEAR Tokens, with the demand for Tokens outstripping supply, and its value will gradually rise. In addition, the NEAR Foundation has established a finance department, where 10% of the income earned by validators in each round will be deposited to support the continuous development of the protocol and ecosystem. However, this mechanism has been widely controversial due to its violation of the principle of Decentralization.

The following are the four main functions of NEAR Token:

• Network Security: Maintain the security and stability of the network by staking NEAR Token.
• Payment transaction and data storage fees: Users need to hold a certain amount of NEAR to pay for transaction fees and data storage fees on the NEAR network, and this amount dynamically increases with the storage capacity required by the user.
• Exchange Medium: NEAR Token can be used as an exchange medium within the NEAR ecosystem.
• Accounting Unit: NEAR Token is the basic accounting unit on the NEAR network.

Tokenomics

The total token issuance of NEAR is 1 billion, and each NEAR is subdivided into 10^24 yoctos, which is the smallest accounting unit. The vesting schedule for token investors gradually unlocks over the first 2-3 years after release. NEAR's inflation model sets a maximum annual inflation rate of 5% for rewards, with 90% of the rewards going to validators and 10% going to the NEAR Treasury. However, the actual inflation rate may vary due to network activity and sometimes even be lower than 5%. In addition, the NEAR network collects and consumes network fees, similar to the EIP-1559 mechanism in Ethereum, which further reduces the actual inflation rate. As network activity increases, the inflation rate of NEAR will decrease, bringing more actual rewards to stakers and attracting more users and traders. The token economy design of NEAR aims to promote the sustainability of the entire ecosystem through rewarding stakers, consuming network fees, attracting developers, and users.

NEAR Protocol Ecosystem

The dApp ecosystem of NEAR protocol is well-developed, and it can easily interoperate with other chains, making it simple and convenient to use. Here are some of the most popular projects currently being built on NEAR.

• Ref Finance: A community-driven multi-functional DeFi platform with a decentralized exchange (DEX), which includes various functions such as providing Liquidity, Yield Farming, and stake.
• Burrow: A Decentralization, non-custodial Liquidity pool interest rate platform, where users can lend their assets to earn Interest, or borrow assets to provide Liquidity, similar to the mechanism of the well-known Aave protocol.
• Mintbase: A global platform that allows Newbies to easily create Non-fungible Tokens, separating revenue and royalties. Only a 2.5% transaction fee is charged for each sale.

NEAR protocol perfectly demonstrates the combination of efficiency and scalability, with the number of accounts on the network continuously rising, currently exceeding 16 million. The project has successfully raised over $500 million from venture capitalists such as Circle, Alameda Research, and FTX. These funds should be sufficient to help the team continue to develop the ecosystem and weather the potential crypto winter. NEAR protocol aims to 'win' Ethereum users and provide a reference for dApp developers and those who want a user-friendly, scalable, and cost-effective protocol. The future of NEAR protocol is bright. However, due to the volatility and uncertainty of the encryption industry, there are many factors to consider, such as whether NEAR protocol can remain strong when demand rises and whether the encryption industry can become a mainstream industry accepted by the market. In any case, we need to do sufficient research before making any investments.

How to buy NEAR?

Users can purchase NEAR through Cryptocurrency exchanges such as gate (https://www.gate.io/trade/NEAR_USDT).

1. Log in to Gate.io account, place the cursor on the navigation bar [Trading], and click on [Spot Trading].
2. Enter 'NEAR' in the search box, and the system will display the supported trading pairs on the platform.
3. Gate.io supports a variety of order types. Taking a limit order as an example, after entering the buying price and quantity, click on [Buy NEAR] to place the order. Once the order is matched, NEAR tokens will be deposited into your SpotWallet.

In addition, Gate.io also supports purchasing NEAR via credit/debit card or bank transfer.

After obtaining NEAR tokens, users can choose to transfer them to a non-custodial Wallet or continue to hold them in their Gate.io account. If the latter option is chosen, you can also generate passive income through various services provided by Gate.io, such as stake and lending. Currently, NEAR tokens support both of these methods of earning income.

Reference

To get the latest information about NEARprotocol, you can visit:

• NEARprotocol Official Website
• Twitter
• Discord
• GitHub
• Telegram
• Reddit

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